Chatham House Report Keir Giles, Philip Hanson, Roderic Lyne, James Nixey, James Sherr and Andrew Wood The Russian Challenge Chatham House Report Keir Giles, Philip Hanson, Roderic Lyne, James Nixey, James Sherr and Andrew Wood | June 2015 The Russian Challenge Chatham House, the Royal Institute of International Affairs, is an independent policy institute based in London. Our mission is to help build a sustainably secure, prosperous and just world.

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7 May 2015: Towing cables are attached to a Russian T-14 tank after it breaks down in Red Square during the dress rehearsal for the 2015 Victory Day parade.

The new T-14, formally displayed for the first time at the parade on 9 May, has become a symbol for Russia’s far-reaching rearmament and military modernization programme. The reported advanced design and capabilities of the tank and its related series of other new armoured vehicles have been the subject of widespread discussion among defence experts, both within Russia and abroad. But the introduction of the tank comes amid growing doubt over the capacity and sustainability of Russia’s defence industry – and of the economy as a whole – while subjected to external sanctions and domestic inefficiencies.

ii | Chatham House Contents

About the Authors iv Acknowledgments v Executive Summary and Recommendations vi

Резюме и рекомендации ix

1 Introduction 1 2 Russia’s Changed Outlook on the West: From Convergence to Confrontation 2 Roderic Lyne 3 An Enfeebled Economy 14 Philip Hanson 4 A War of Narratives and Arms 23 James Sherr 5 Russian Foreign Policy Towards the West and Western Responses 33 James Nixey 6 Russia’s Toolkit 40 Keir Giles 7 Russian and Western Expectations 50 Andrew Wood

Summary of Recommendations 58

Chatham House | iii About the Authors

Keir Giles is an associate fellow of the International James Nixey is head of the Russia and Eurasia Programme Security Department and the Russia and Eurasia at Chatham House. His principal expertise concerns the Programme at Chatham House. He is also a director of relationships between Russia and the other post-Soviet the Conflict Studies Research Centre (CSRC), a group of states. His publications include The Long Goodbye: Waning subject matter experts in Eurasian security. His career Russian Influence in the South Caucasus and Central Asia; began in aviation in the early 1990s, working with Soviet ‘Russia’s Geopolitical Compass: Losing Direction’ in Putin military and paramilitary aircraft in Crimea. He went on Again: Implications for Russia and the West; and ‘The to write for several years as Russia correspondent for a South Caucasus: Drama on Three Stages’ in A Question range of military and civilian aviation journals, and to of Leadership: America’s Role in a Changed World. join the BBC Monitoring Service, where he specialized in James Sherr is an associate fellow and former head, military and economic issues in the former Soviet space. between 2008 and 2011, of the Russia and Eurasia He was seconded to CSRC in 2005 while it was still part Programme at Chatham House. He was a member of the of the UK Defence Academy (UKDA), and in 2010 brought Social Studies Faculty of Oxford University from 1993 to key team members into the private sector after the closure 2012; a fellow of the Conflict Studies Research Centre of the of the UKDA’s non-technical research programmes. He UK Defence Academy from 1995 to 2008; and director of now oversees CSRC’s research and publications, while studies of the Royal United Services Institute from 1983 to continuing to write and publish on his own specialist 1985. He has published extensively on Soviet and Russian area of Russian approaches to conventional, cyber and military, security and foreign policy, as well as energy information warfare. security, the Black Sea region and Ukraine’s efforts to deal Philip Hanson is an associate fellow of the Russia and with Russia, the West and its own domestic problems. Eurasia Programme at Chatham House and professor Andrew Wood is an associate fellow of the Russia emeritus at the Centre for Russian and East European Studies and Eurasia Programme at Chatham House. Since his of the University of Birmingham, where he also served as retirement from the British diplomatic service in 2000, as director from 2001 to 2002. He has held positions at the ambassador in Moscow from the summer of 1995, he has UK Treasury, the UK Foreign & Commonwealth Office, the held positions with a number of UK-based companies with UN Economic Commission for Europe, and Radio Liberty; Russian interests as well as others active in other former and has been a visiting professor at Michigan, Harvard, Soviet countries. He co-wrote a book, Change or Decay, Kyoto, Södertörns and Uppsala universities. He has with Lilia Shevtsova published by the Carnegie Institute worked mainly on the Soviet and Russian economies, with in November 2011 and has been a regular contributor occasional excursions into other topics. His books include to Chatham House publications, as well as to material Regional Economic Change in Russia (co-edited with Michael produced by The American Interest. Bradshaw) and The Rise and Fall of the Soviet Economy. Roderic Lyne, deputy chairman of the Chatham House Council, was a member of the UK diplomatic service from 1970 to 2004, serving as British ambassador to the Russian Federation from 2000 to 2004. From 2005 to 2007 Sir Roderic was a member of the Task Force of the Trilateral Commission on Russia and co-authored, with Strobe Talbott and Koji Watanabe, a report to the Commission entitled Engaging with Russia: The Next Phase.

iv | Chatham House Acknowledgments

The authors would like to thank Chloe Cranston, Caroline Hattam, Nikolay Kozhanov, Orysia Lutsevych, Arbakhan Magomedov, Margaret May, Andrew Monaghan, Robin Niblett, Ľubica Polláková, Lilia Shevtsova, Zaur Shiriyev and Jake Statham for their invaluable work on various aspects of this report. They are also grateful to the four anonymous peer reviewers who commented on an early draft. Responsibility for any errors of fact or analysis, as always, lies with the authors.

Chatham House | v Executive Summary and Recommendations

The war in Ukraine, and Vladimir Putin’s bid to overturn control of its neighbourhood. The model is fundamentally the post-Cold War international settlement in Europe, have at odds with a Europe that has moved on to a different forced many Western governments to reappraise their conception of international order. As a result, the prospect approach to Russia. Until 2003, it was widely believed that of a strategic partnership with Russia, yearned for by many a modernizing Russia might be accommodated into the in the West, has become remote in the face of incompatible international system as a constructive and benign actor. interests and irreconcilable values. Variations on this view have given way to the realization Putin’s model plays strongly to the personal interests of that Russia, on its present course, cannot be a partner or the clans affiliated with his personal leadership, but it has ally, and that differences outweigh any common interests. been marketed to appeal to the patriotic instincts of the Russia faces mounting internal difficulties, including a wider Russian population. The ruling group’s control of the weakening economy and a political culture that stifles economy and the levers of power – civil administration, the enterprise and society. The combination of these forces armed forces and the security organs – will not be easily imperils both security in Europe and stability in Russia. shaken. However, the regime is now facing the most serious The Russian challenge, which this report sets out to challenge of its 15 years in power. Over time, economic examine, is therefore twofold: it is a challenge to the pressures, combined with the unsustainable extent of West, in terms of managing the increasing threats Russia top-level corruption, will generate a growing imperative poses to international order; and to Russia itself. for change. The new model Russia is not sustainable, and Western governments need to consider their responses to President Putin’s options are uncomfortably narrow. various scenarios for change. Russia’s longer-term interests would best be served by structural reforms at home and mutual accommodation with outside powers, small as well as great. But such policies An enfeebled economy would threaten the ability of Putin and his circle to hold The Russian economy has moved into recession. If and on to power. While a reforming Russia would benefit from when it returns to growth, this will be sluggish at best. The closer integration with the European Union, the Kremlin influences dragging down Russian economic performance now opposes EU enlargement into its claimed ‘sphere of are structural, conjunctural and geopolitical. In the long interest’ as adamantly as the enlargement of NATO. Putin term, the possibility of growth is severely limited by the has intensified the policies he adopted following his return decline in the economically active workforce and the to the titular presidency in May 2012: increased domestic constraints the Putinist system places on competition and repression; more centralized direction of the economy; the private investment. Market pressures and external conflict fomenting of anti-Western nationalism; increased defence pose additional challenges of uncertain duration. However expenditure; and the pursuit of hegemony over as much long they last, Russia will find it economically difficult to of the post-Soviet space as possible. sustain its current and planned levels of energy exports These choices have boxed the regime in. Russia needs and its ambitious rearmament programme. reform, but the domestic political obstacles to it are By themselves, EU and US sanctions are unlikely to daunting. At the same time, if Moscow maintains its current provoke such economic distress as to force Russia to step course – in both economic management and international back in Ukraine. On the contrary, they provide the Russian relations – this will be increasingly dangerous for Europe leadership with a handy scapegoat for ‘stagflation’. The and costly, if not disastrous, for Russia. pressure on the regime exerted by sanctions none the less The questions addressed in this report are how far those remains important while the confrontation continues. costs will rise, whether Russia can bear them, what will The critical element in the new geo-economic competition happen if it cannot, and how the West should respond between the West and Russia is the extent of Western in the near and longer term. economic support for Ukraine.

Deconstructing the Russian challenge Ukraine: a war of narratives and arms The conflict in Ukraine is a defining factor for the future of Russia’s changed outlook on the West European security. The Kremlin perceives that Europe lacks the will to pay the necessary price to defend its principles. President Putin’s ‘new model Russia’ is that of an Moscow has underestimated the coherence and resilience independent Great Power resuming its geopolitical position of Ukraine, but this does not mean that it cannot achieve on its own terms. This reflects a deep sense of insecurity and its core objectives: to wreck Ukraine if it cannot control it, a fear that Russia’s interests would be threatened if it lost to preserve Russia’s western borderlands as a ‘privileged

vi | Chatham House The Russian Challenge Executive Summary and Recommendations

space’, and to make Europe accept that ‘there can be no Russian and Western expectations security without Russia’. The root cause of the Ukraine crisis lies in Russia’s For the Kremlin, war is a clash of wills as much as resources. internal development, and its failure to find a satisfactory In the absence of constraints on Russian military power, the pattern of development following the collapse of the risk is not that Russia could impose a military solution, but Soviet Union. Putin and his circle are not the same that it might enforce a political one that would damage the as Russia and its people, and their interests do not West’s interests and nullify its efforts. A solution based on necessarily coincide. terms dictated by today’s Russia would not last. The West has neither the wish nor the means to promote, or for that matter to prevent, regime change in Russia. Russia’s foreign policy towards the West But Western countries need to consider the possible consequences of a chaotic end to the Putin system. There has been no sudden change in direction in Russia’s foreign policy or values since the beginning of the crisis over Ukraine. Russian ambitions and intentions had been Recommendations telegraphed for well over a decade, but the West found it easier at the time to disregard them and indulge in the fantasy that Western policy-makers will continue to differ in their Russia was progressing towards a liberal-democratic model assessments of the extent of the Russian challenge and the with which the West felt comfortable. The war in Ukraine is, in best ways to respond to it. But the consensus is emerging part, the result of the West’s laissez-faire approach to Russia. that Russia cannot be integrated into the sort of rules- The West views former Soviet states as fully sovereign based international order in Europe that all European countries. As a result, Putin’s determination to re-establish states subscribe to, unless and until there is a fundamental Russian primacy in its former dependencies is the crux of change of direction in Moscow. It is a change that must the ‘Russian challenge’ to Europe. But additional challenges come from within. are created by Russia’s illegitimate activities in the European The West therefore needs to develop and implement a clear Union, such as market monopolization and the co-option of and coherent strategy towards Russia. As far as possible this elites, its desperate quest for equality with the United States, must be based on a common transatlantic and European and its pursuit of what it sees as its own interests regardless assessment of Russian realities. In particular, policy must of the implications for itself and others. be based on the evidence of Russia’s behaviour, not on convenient or fashionable narratives. Russia’s toolkit Overall Western cohesion is critical for success. The The Russian government has pursued its interests by main actors, at least, need to be aligned and working means of a wide range of hostile measures against its closely together. This Western strategy needs to include the neighbours, none of which are compatible with European following clear goals, and establish the near-term means notions of cooperative international relations. In addition and longer-term capabilities to achieve them. to well-publicized instances of energy cut-offs and trade embargoes, other tools include subversive use of Russian Strategic goals for the West minorities, malicious cyber activity of various forms, and the co-option of business and political elites. One of the • To deter and constrain coercion by Russia against its most distinctive ways in which the Kremlin sustains leverage European neighbours, for as long as is needed, but over its neighbours is by keeping long-running disputes not to draw fixed dividing lines. The door should be alive or frozen for potential future use. kept open for re-engagement when circumstances change. This cannot be expected with any confidence Two specific levers that have developed rapidly since the under Putin, and it cannot be predicted what the armed conflict with Georgia in 2008 are Russia’s armed next regime will look like. But there is a reasonable forces and its information warfare capabilities. Both possibility that the decline of the Russian economy, have been employed to great effect during the crisis over the costs of confrontation and the rise of China will Ukraine; and both can be expected to be used elsewhere incline a future Russian leadership to want to re- in the future. Continued intensive investment in military engage with the West. capability, despite Russia’s economic difficulties, is intended to narrow the capability gap with Western militaries led by • To restore the integrity of a European security system the United States, and thereby to reduce further the risk based on sovereignty, territorial integrity and the inherent in Russia’s possible future military interventions. right of states to determine their own destinies.

Chatham House | vii The Russian Challenge Executive Summary and Recommendations

• To find better ways to communicate to the • EU energy policy should aim to deprive Russia of Russian regime and people that it is in their long-term political leverage in energy markets, rather than to national interest to be a part of a rules-based Europe, remove Russia from the European supply mix. To not an isolated regional hegemon. this end, the momentum generated by the EU’s Third Energy Package and the cancellation of the South • To explain Western policies consistently and regularly Stream pipeline project needs to be consolidated. in discussions with China, and to all former Soviet This should be done through further measures states, most of which have reason to be concerned against opaque, anti-market practices by Russian about Russian policies, whether or not they admit state energy companies, and through the acceleration it. Governance is flawed in several of these states, of steps already in train to eliminate ‘energy islands’ but that is no reason to leave them hearing only the in Europe. views of the Kremlin. • Western states need to invest in defensive strategic • To prepare for the complications and opportunities communications and media support in order to that will inevitably be presented by an eventual counter the Kremlin’s false narratives. Promoting change of leadership in Russia. truthful accounts of Western policies and values, in • Not to isolate Russia or its people. President Putin’s an intelligent manner that is relevant to audiences, is regime is already doing that very effectively. It is not essential. This must happen both on a national level, in the Western interest to help him cut the Russian and through EU and NATO cooperation. Channels people off from the outside world. of contact to ordinary Russians (including through education and other interpersonal links) should be sustained. Specific policy objectives • NATO must retain its credibility as a deterrent • The reconstruction of Ukraine as an effective to Russian aggression. In particular, it needs to sovereign state, capable of standing up for itself, is demonstrate that limited war is impossible and that crucial. This requires the input of much greater effort the response to ‘ambiguous’ or ‘hybrid’ war will (political and human resources as well as financial; be robust. and a major programme of technical assistance) than has been the case up to now. Ukraine’s failure would • Conventional deterrent capability must be restored deepen instability in Eastern Europe, increase the as a matter of urgency and convincingly conveyed, to risk of further Kremlin adventures, and diminish the avoid presenting Russia with inviting targets. prospects for eventual beneficial change in Russia. • Individual EU member states, as well as the • The EU’s Eastern Partnership needs to be European Union as a whole, including through transformed into an instrument that enables the the External Action Service, need to regenerate European Union and individual member states to their capacity to analyse and understand what is reinforce the sovereignty and economies of Eastern going on in Russia and neighbouring states. This partners which have proved willing to undertake understanding, and greater institutional expertise, serious political and economic reform. must then be used as a basis for the formation of policy. • The effectiveness of sanctions against Russia depends on their duration as well as severity. The Pursuing these goals and achieving these objectives issue that triggered sanctions was the violation of will ensure that the West is better prepared for any Ukraine’s territorial integrity, and until that issue further deterioration in relations with Russia. Vladimir is fully addressed sanctions should remain in place. Putin must not be accommodated for fear that any In particular, it is self-defeating to link the lifting successor would be even worse. This accommodation of sanctions solely to implementation of the poorly has already failed. Whether the present leadership crafted and inherently fragile Minsk accords. endures or is prematurely replaced, the way ahead will be complex and potentially turbulent. The events of the • The West should not return to ‘business as usual’ last 18 months have demonstrated conclusively that in broader relations with the Russian authorities when dealing with Russia, optimism is not a strategy. until there is an acceptable settlement of the Ukrainian conflict and compliance by Russia with its international legal obligations.

viii | Chatham House Резюме и рекомендации

Война в Украине и попытки B.B. Путина разрушить Авторы данного доклада пытаются ответить на сформировавшуюся после холодной войны систему следующие вопросы: какова возможная цена этих международных отношений в Европе заставили последствий? Сможет ли Россия с ними справиться? многие западные государства пересмотреть свое Что произойдет в противном случае? Как Запад должен отношение к России. До 2003 года считалось, что реагировать на российские процессы в ближайшей и обновленная Россия может стать конструктивным и более длительной перспективе? здоровым членом международного сообщества. Однако постепенно пришло осознание того, что пока Москва придерживается своего нынешнего политического Структурируя проблему российского вызова курса, она не может быть партнером или союзником, и что существующие различия перечеркивают любые Изменение в российском восприятии Запада общие интересы России и Запада. «Новая модель развития России», предлагаемая В России нарастают внутренние проблемы – слабеющая президентом В.В. Путиным – это независимая «Великая экономика и политическая культура, которая душит Держава», восстанавливающая свое геополитическое деловую и гражданскую инициативу. Все это угрожает положение на собственных условиях. Эта модель как безопасности в Европе, так и стабильности самой отражает глубокое чувство неуверенности и России. Иными словами, существующий российский опасений того, что интересы России пострадают, вызов – главная тема этого доклада – имеет двоякую если она потеряет контроль над соседними странами. природу: с одной стороны, он брошен Западу, который Такая модель в корне расходится с концепцией вынужден противодействовать растущей российской международного порядка, которую приняла Европа. угрозе существующему международному порядку, а, с Поэтому перспектива стратегического партнерства другой стороны, это вызов и для самой России. с Россией, к которому стремились многие на Западе, становится все более призрачной из-за У президента В.В. Путина ограничен выбор действий. несовместимости интересов России и Запада и С точки зрения долгосрочных интересов России конфликта их ценностей. самым разумным было бы провести структурные реформы внутри страны и достичь взаимовыгодных Полностью отвечающая личным интересам кланов, договоренностей с различными по своей мощи и обязанных В.В. Путину своим существованием, влиянию внешними игроками. Однако такая политика широким слоям российского общества эта модель поставила бы под угрозу возможность В.В. Путина и преподносится в патриотической упаковке. Не так его окружения удержаться у власти. Несмотря на то, легко будет ослабить то влияние, которое правящая что реформированная Россия выиграла бы от более группировка осуществляет над экономическими тесной интеграции с Европейским Союзом, Кремль и политическими рычагами – в гражданской сейчас выступает против расширения ЕС за счет стран, администрации, в вооруженных силах и в органах входящих в его заявленную «сферу интересов», на безопасности. Однако сейчас режим столкнулся с которую он претендует, так же жестко, как когда-то самыми серьезными проблемами за пятнадцать лет выступал против расширения НАТО. В.В. Путин стал своего существования. Со временем экономические активнее реализовывать ту политическую стратегию, проблемы в сочетании с безудержной коррупцией которая была принята им после возвращения на пост на высшем уровне вызовут растущую потребность в президента в мае 2012 года. Последняя включает переменах. Новая модель развития России неустойчива, ужесточение репрессий внутри страны, усиление и западным правительствам следует разработать централизованного управления экономикой, возможные варианты реагирования на различные разжигание антизападных националистических сценарии таких перемен. настроений, увеличение расходов на оборону и стремление к установлению гегемонии на широком Слабость экономики постсоветском пространстве. Экономика России перешла в стадию рецессии. Даже Этот политический выбор загнал режим в тупик. России когда экономический рост восстановится – если нужны реформы, но им мешают серьезные политические это вообще произойдет – он будет в лучшем случае препятствия внутри страны. В то же время, если вялым и неустойчивым. Факторы, тормозящие Москва продолжит придерживаться нынешнего рост российской экономики, имеют структурный, курса, как в сфере экономического управления, так конъюнктурный и геополитический характер. В и в сфере международных отношений, это усилит долгосрочной перспективе, возможность роста будет угрозу для Европы и приведет к серьезным, если не серьезно ограничена сокращением экономически катастрофическим, последствиям для самой России.

Chatham House | ix The Russian Challenge Резюме и рекомендации

активного населения и мерами, которые путинская направлении либерально-демократической модели, система использует для ограничения конкуренции и устраивавшей Запад. Война в Украине – это, кроме частных инвестиций. Рыночные факторы и внешние прочего, результат политики попустительства, которую конфликты создают дополнительные проблемы на Запад осуществлял по отношению к России. неопределенную перспективу. Независимо от того, как Запад считает бывшие советские республики долго эти проблемы будут оставаться нерешенными, полностью суверенными странами. Поэтому России будет экономически трудно поддерживать стремление В.В. Путина восстановить российское экспорт энергоносителей на текущем и планируемом господство в странах, которые были в прошлом уровне и финансировать свою амбициозную подвластны ей, – суть «российского вызова» для программу перевооружения. Европы. Но существуют еще и дополнительные Сами по себе, европейские и американские санкции проблемы, такие как незаконные действия России в вряд ли спровоцируют такие экономические трудности, ЕС по монополизации рынка и кооптации европейской которые заставят Россию отказаться от своей политики элиты, ее отчаянная погоня за равноправием с в отношении Украины. Напротив, для российского Соединенными Штатами и стремление, невзирая на руководства они являются удобным объяснением, на последствия для себя и других, продвигать собственные которое можно списать существующую стагфляцию. интересы или то, что она считает таковыми. Тем не менее, санкции оказывают ощутимое давление на режим при продолжающейся с Западом. Масштаб Российский инструментарий западной экономической помощи Украине является важным фактором в новой геоэкономической Правительство России продвигает свои интересы конкуренции между Западом и Россией. с помощью широкого спектра мер, направленных против своих соседей. Ни одна из них не совместима с европейскими понятиями международных отношений, Украина: война трактовок и оружия основанных на сотрудничестве. Кроме известных Конфликт в Украине является определяющим фактором случаев прекращения поставок энергоносителей и в обеспечении европейской безопасности в будущем. наложения торгового эмбарго, применялись и другие Кремль считает, что Европе не хватает готовности инструменты, такие как использование подрывного заплатить необходимую цену для защиты своих потенциала российских зарубежных общин, принципов. Москва недооценила единство и стойкость pазличные формы кибератак и кооптация деловых Украины. Но это не значит, что ей не удастся достичь и политических элит. Один из самых типичных своих основных целей – если не взять под контроль, способов, которые использует Кремль для сохранения то хотя бы расчленить Украину, сохранив западные рычагов влияния на своих соседей – это разжигание окраины России в качестве своего «привилегированного старых конфликтов или их замораживание для пространства» и заставить Европу признать, что возможного использования в будущем. «безопасности без участия России не может быть». Два конкретных инструмента внешнеполитического Для Кремля война – это противостояние не только влияния, чей потенциал Москва активно развивала ресурсов, но и воли. При отсутствии факторов, после вооруженного конфликта с Грузией в 2008 сдерживающих российскую военную силу, риск состоит году – это вооруженные силы России и ее ресурсы по не в том, что Россия сможет навязать военное решение, ведению информационной войны. Оба инструмента а в том, что ей удастся реализовать политический весьма эффективно использовались во время кризиса сценарий, который нанесет ущерб интересам Запада вокруг Украины и, скорее всего, в будущем будут и сведет на нет его усилия. Разрешение конфликта, опять использованы в других местах. Интенсивное основанное на условиях, продиктованных современной наращивание Москвой собственного военного Россией, не может быть устойчивым. потенциала, несмотря на экономические трудности, имеет целью сократить отставание от западных вооруженных сил, во главе с Соединенными Штатами, Внешняя политика России по отношению к Западу чтобы уменьшить риск, связанный с возможной С начала кризиса вокруг Украины в российской внешней российской военной интервенции в будущем. политике и ее ценностях не произошло никаких кардинальных изменений. Россия сигнализировала о Ожидания России и Запада своих амбициях и намерениях более десяти лет назад, но тогда Западу было удобно не обращать на это внимания Коренная причина кризиса вокруг Украины кроется и предаваться фантазиям, что Россия развивается в во внутреннем развитии России и ее неспособности x | Chatham House The Russian Challenge Резюме и рекомендации

найти удовлетворительную модель развития после спад в российской экономике, расходы на распада Советского Союза. Путин и его окружение конфронтацию и подъем Китая положительно – это не Россия и ее народ, и их интересы не повлияют на готовность будущего российского обязательно совпадают. руководства к возобновлению сотрудничества с Западом. Запад не имеет ни желания, ни средств, чтобы содействовать или препятствовать смене режима • Восстановить целостность европейской системы в России. Но западные страны должны учитывать безопасности, основанной на суверенитете, возможные последствия хаотического развала территориальной целостности и праве государств путинской системы. самостоятельно определять свою судьбу. • Найти более эффективные способы убедить российский режим и российский народ в том, Рекомендации что их долгосрочным национальным интересам отвечает интеграция России в основанную на Среди западных политиков будут сохраняться правилах Европу, а не изоляция в качестве разногласия в оценке серьезности проблемы России регионального гегемона. и того, как лучше реагировать на нее. Однако уже складывается консенсус относительно того, что • Регулярно и систематически объяснять политику Россию невозможно интегрировать в европейский Запада в дискуссиях с Китаем и всеми бывшими международный порядок на основанни правил, советскими республиками, большинство из признанных всеми европейскими государствами, до которых имеют основания для обеспокоенности тех пор пока не произойдет кардинального изменения российской политикой, даже если они в этом не кремлевского курса. И такое изменение должно признаются. В некоторых из этих стран далеко произойти изнутри. не безупречная система управления, но это не означает, что они должны слышать только точку Поэтому Запад должен разработать и внедрять зрения Кремля. четкую и последовательную стратегию по отношению к России. Насколько возможно, такая стратегия • Подготовиться к осложнениям и возможностям, должна основываться на общей трансатлантической и которые неизбежно представятся, когда в России, европейской оценке российских реалий и понимании наконец, произойдет смена руководства. поведения России, а не на удобных или модных мифах • Не изолировать Россию и россиян. Режим и стереотипах. президента Путина уже занимается этим весьма Сплоченность Запада – критический фактор конечного эффективно, и помогать ему изолировать россиян успеха. По крайней мере, главные западные игроки от внешнего мира не входит в интересы Запада. должны координировать свои действия и работать в тесном взаимодействии между собой. Западная Конкретные цели и задачи политики Запада стратегия должна включать следующие четкие цели и предусматривать краткосрочные и долгосрочные • Решающее значение имеет трансформация средства их достижения. Украины в эффективное суверенное государство, способноe постоять за себя. Для этого требуется гораздо больше усилий (политические, Стратегические цели Запада человеческие и финансовые ресурсы, а также • Сдерживать и ограничивать попытки масштабная программа технической помощи), принуждения со стороны России по отношению чем то, что делалось до сих пор. Крах Украины к ее европейским соседям – сколь долго это усугубит нестабильность в Восточной Европе, будет необходимо, – но не создавать при увеличит риск новых авантюр со стороны Кремля этом фиксированных разделительных линий. и ограничит перспективы потенциальных Двери должны оставаться открытыми для благоприятных перемен в России. возобновления взаимодействия с Россией в • Проект ЕС «Восточное партнерство» должен стать будущем, когда изменятся обстоятельства. Нельзя инструментом, который позволит Европейскому с уверенностью ожидать, что это произойдет при Союзу и его отдельным членам укрепить В.В. Путине, но также невозможно предсказать, суверенитет и экономику восточных партнеров, каким будет следующий режим. В то же время проявивших готовность провести серьезные существует вполне резонная вероятность, что политические и экономические реформы.

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• Эффективность санкций против России зависит от должно осуществляться как на национальном их продолжительности и жесткости. Санкции были уровне, так и через сотрудничество в рамках введены в ответ на нарушение территориальной ЕС и НАТО. Необходимо поддерживать каналы целостности Украины и должны оставаться в силе контакта с простыми россиянами (в том числе, до тех пор, пока этот вопрос не будет полностью посредством образовательных программ и других решен. В частности, привязывание отмены межличностных связей). санкций исключительно к выполнению плохо • НАТО должна сохранить свою состоятельность проработанных и изначально хрупких минских в качестве фактора сдерживания российской соглашений обречено на провал. агрессии. В частности, альянс должен • Запад не должен возвращаться к сценарию продемонстрировать, что ограниченная сотрудничества с Россией в более широком война невозможна, и что на «двусмысленную» контексте отношений с российскими властями или «гибридную» войну последует до тех пор, пока не будет достигнуто приемлемое решительный ответ. урегулирование украинского конфликта и пока • Необходимо срочно восстановить обычные силы Россия не начнет соблюдать свои международные сдерживания и убедительно показать, что у правовые обязательства. России не будет легкодоступных целей. • Энергетическая политика ЕС должна • Отдельные государства-члены ЕС, а также быть направлена на то, чтобы лишить Европейский Союз в целом, в том числе через Россию политических рычагов контроля свою Европейскую службу внешнеполитической над энергетическими рынками, а не на ее деятельности, должны восстановить ресурсы, исключение из европейского энергобаланса. которые бы дали возможность анализировать и Для этого необходимо поддерживать понимать процессы, происходящие в России и динамику, сложившуюся благодаря Третьему в соседних с нею государствах. Это понимание, энергетическому пакету ЕС и отмене проекта в сочитании с более глубокой организационной по строительству газопровода «Южный экспертизой, должно стать основой для поток», принимая дальнейшие меры против формирования политики. непрозрачных, антирыночных действий со стороны российских государственных Стремление к этим целям и их достижение поможет энергетических компаний и ускоряя уже Западу лучше подготовиться к дальнейшему ухудшению запущенные процессы по устранению отношений с Россией. Нельзя идти на уступки «энергетических островов» в Европе. Владимиру Путину из боязни, что его преемник будет еще хуже. Такой подход уже доказал свою • Западные государства должны вложить несостоятельность. Что бы ни случилось – останется средства в оборонительные стратегические ли нынешнее руководство у власти или произойдет коммуникации и поддержку СМИ, чтобы досрочная смена власти – впереди лежит сложный и, противостоять кремлевской пропаганде. Важно возможно, турбулентный путь. События последних 18 иметь возможность объективно представлять месяцев убедительно показали, что в отношениях с западную политику и ценности, грамотно и Россией оптимизм – проигрышная стратегия. доступно разъясняя их целевой аудитории. Это

xii | Chatham House 1. Introduction

In the introduction to a previous Chatham House Report on The report addresses six important aspects of the Russia – Putin Again: Implications for Russia and the West – Russian challenge. In Chapter 2, Roderic Lyne outlines published in February 2012, the authors remarked that ‘the the background to current events, tracks the evolution of West will feel Russia’s pain’ as it ‘lashes out while in denial Putin’s outlook on the West, and explains the president’s of its own condition’. new model for Russia, concluding that it is unsustainable. Philip Hanson examines this unsustainability in Chapter Some of the authors of Putin Again have once more 3, showing how Russia’s economic decline is as much due contributed chapters to this new report, describing how to long-term structural factors as it is to contemporary both the pain and the denial they predicted are now making pressures. James Sherr contributes an analysis of Russia’s themselves felt. But none of them foresaw just how radically involvement in the struggle over Ukraine in Chapter 4, and rapidly Russia would move to challenge the post-Cold and highlights the risks posed by Western inaction in the War security order, seizing Crimea within two years of face of Russian political manoeuvring. James Nixey argues Vladimir Putin’s return to the Kremlin in May 2012 and in Chapter 5 that Russian foreign policy has, in fact, not embarking on the dismemberment of eastern Ukraine. changed significantly for over a decade, and that the desire This report examines four key questions. First, what caused for control over the post-Soviet periphery (and consequent this challenge? Second, where is Russia heading? Third, inevitable adversarial relations with the West) is a what are the possible geopolitical consequences in the persistent factor in Moscow’s planning. In Chapter 6, Keir widest sense? And finally, at the tactical and strategic levels, Giles analyses the tools deployed by the Russian state to how should the West act and react? maintain that control – with a particular focus on Russia’s upgraded military capabilities, refined information The authors of this report believe that the major Western warfare techniques and distinctive interpretation of ‘soft actors have yet to absorb the full implications of Russia’s power’. Andrew Wood completes the circle in Chapter 7, descent into authoritarian nationalism. It will take greater urging the West to consider how it will deal proactively imagination than has been shown to date to develop an with the risks of Russia after Putin. effective response to Moscow’s manoeuvres, supported as they are by both traditional and unconventional methods Vladimir Putin has chosen the strategic approach of and means. Western strategy will have to take account of rebuilding ‘Fortress Russia’. It is a key contention of this two incontrovertible facts. First, Moscow and the West have report that his policy risks both figurative and literal competing, conflicting and entirely incompatible agendas. bankruptcy for Russia, and potentially the premature Second, Putin is a fundamentally anti-Western leader whose departure of its current leader. The timing of this serial disregard for the truth has destroyed his credibility as departure and the nature of what may follow cannot a negotiating partner. Consequently, it is unwise to expect be predicted. The West’s key players must plan for all that any compromise with Putin will produce long-term eventualities, at the same time as resisting Russia’s stable outcomes in Europe. illegitimate and illegal activities today. To date, the United Kingdom has not settled on a truly The report finishes by offering specific recommendations to strategic approach. Meanwhile the Obama administration address both current and future challenges. It constitutes a and many European leaders apparently still hope that plea for Western governments to think much more deeply the crisis will somehow fade away. But the precedent of about the level of support that should be provided to Georgia in 2008 demonstrated that even if Ukraine were to Ukraine; about how future crises can be pre-empted or at disappear from the headlines, this would not imply a return the least managed better; and above all, about how Russia to peace and stability in Europe. The West would dearly like can be managed over the long term for the greater security Ukraine’s President Petro Poroshenko to patch up some sort of Europe. of an accommodation with Putin, so that attention can be turned to other pressing global problems. This report warns how short-sighted and futile such an arrangement would be.

Chatham House | 1 2. Russia’s Changed Outlook on the West: From Convergence to Confrontation Roderic Lyne

If Russia continues along its course of the past few weeks, it will not to significant changes in Russia’ and that ‘there has been only be a catastrophe for Ukraine. We would not only regard it as a strong element of “sleep-walking” into the current crisis, a threat as neighbouring states of Russia. It would not only change with Member States being taken by surprise by events in the relationship of the European Union as a whole with Russia. Ukraine’.1 The EU should not have been taken by surprise. No, it would, I am absolutely convinced, hugely damage Russia not least of all, both politically and economically. The evidence has been in plain view.

Chancellor Angela Merkel, speaking in the Bundestag, 13 March 2014 Vladimir Putin set out in 2000 to restore Russia’s status as a Great Power through economic development rather than military might. He initially sought to modernize and Introduction diversify the economy, reducing its dependence on natural resources. He wanted Russia to be part of the international This chapter reviews the way in which Russia’s outlook status quo and ‘truly integrated into Europe’.2 But, from the on the West has changed during the 15 years since middle of 2003, the Putin administration began to change Vladimir Putin assumed power, leading from convergence course. The Russia of 2015 is no more diversified; has an to confrontation. A different model of Russia has emerged, economy in decline; is investing heavily in rearmament; aspects of which are examined in more detail in the rejects international law and the status quo in favour chapters which follow. of disruption and confrontation; and has abandoned all thoughts of a strategic partnership with Europe, For the past year and a half, the West’s relationship with let alone with the United States. Russia has been viewed largely through the prism of Ukraine. Of necessity, the West reacted tactically to Russia’s I have drawn heavily on the words of Putin because he annexation of Crimea and further attempts to destabilize is the embodiment of the regime and its key decision- Ukraine. However the crisis has brought to the surface maker and spokesman. Some argue that there is excessive much wider questions about Russia’s direction of travel personalization in Western analysis of Russian policy. It and the strategic approach that the West should adopt. is certainly the case that Putin has reflected feelings that The pursuit of a ‘strategic partnership’ has failed, for now. are broadly held within Russia and has enacted policies The Cold War paradigm does not fit (except as a piece of that have strong support within powerful constituencies polemics). Russia is a much richer and more assertive power (including the military, the security organs and the than in the Yeltsin years, but the extent of its ‘resurgence’ state bureaucracy). The direction of travel would not tends to be exaggerated by both domestic and Western automatically change if he were to leave. Putin is not commentators: it is a power limited by a relatively weak acting alone but has exercised power with a phalanx of economic foundation. associates; and underpinned his position by playing to, and skilfully manipulating, populist sentiment. But it is also The concept of ‘the West’ is itself unclear. It has always clear that, to quote Dmitri Trenin, ‘on all important issues, been geographically inaccurate, but during the Cold War the Russian political system is driven by one and only one the ‘Eastern’ and ‘Western’ blocs were readily definable. decision-maker: Vladimir Putin. His power is often likened I have used the term in this chapter for want of a better to that of a monarch or a czar and is supported by a long collective description of the democracies which belong tradition of Russian governance.’3 to NATO or the EU or the G7, or which align with those countries. The Ukrainian crisis has demonstrated, however, that Western cohesion is not to be taken for granted. The Putin’s first term: the integrationist model West is no longer a bloc, under clear leadership and with a degree of internal discipline in the face of a common of convergence and partnership adversary. Securing and sustaining a consensus among ‘Western’ states on the response to Russia’s actions in Three themes predominated in Putin’s first three-and-a- Ukraine has been a difficult process. half years in office. He set out to rebuild a strong state, reversing the fragmentation of the Yeltsin years; this was The starting point for a sensible strategy needs to be an to be the instrument for the modernization of Russia, as a accurate appreciation of the problem. In a report published competitive market economy and a democratic, law-based in February 2015, the European Union Committee of the society; and Russia would integrate ever more closely with UK House of Lords commented that, ‘Over the last decade, the advanced countries of the world on a basis of shared the EU has been slow to reappraise its policies in response

1 House of Lords European Union Committee: ‘The EU and Russia: Before and Beyond the Crisis in Ukraine’, HL Paper 115, Stationery Office, 20 February 2015. 2 Annual address to the Federal Assembly, 16 May 2003. 3 Dmitri Trenin: ‘Russia’s Breakout from the Post-Cold War System: the Drivers of Putin’s Course’, Carnegie Moscow Centre, 22 December 2014.

2 | Chatham House The Russian Challenge Russia’s Changed Outlook on the West: From Convergence to Confrontation

values. Before the end of his first term, in March 2004, and on private initiative, both from Russian business and the first of these objectives was beginning to override the from foreign companies working in Russia – ‘the driving second and the third. force of economic growth’. In the ‘Millennium’ manifesto that he issued on 29 Putin was equally clear, early on, in proclaiming adherence December 1999, on the eve of assuming the presidency, to universal and democratic values. Russia had: Putin declared: ‘Our state and its institutions and structures entered the highway along which the whole of humanity is have always played an exceptionally important role in the travelling. Only this way offers the possibility of dynamic life of the country and its people.’ economic growth and higher living standards. … We have come to value the benefits of democracy, a law-based state, and As prime minister, he was the principal instigator of the personal and political freedom. … History proves all dictatorships, renewed campaign, from October 1999, to bring secessionist all authoritarian forms of government are transient. Only Chechnya back under central control – which Yeltsin had democratic systems are intransient.6 failed to achieve in the first Chechen war of 1994–96. He argued in his first annual address that Russia needed In his first set-piece ‘Annual Address to the Federal political parties with mass support (not ‘parties of officials Assembly’ of 8 July 2000, Putin argued that a ‘vertical of which are attached to the government’), a truly free media power’ and ‘dictatorship of the law’ were essential for the and freedom of speech. governance of Russia: ‘The authorities must be guided by the law and the single executive power vertical that In seeking closer integration with the West, Putin sought is formed in accordance with it … we insist on a single to revive a trend towards partnership which had faltered dictatorship – the dictatorship of the law.’ To exercise in Yeltsin’s second term, especially during NATO’s 1999 stronger control over Russia’s regions and their governors bombing campaign against Yugoslavia. He invited the (who at the time were still independently elected), NATO secretary-general to Moscow and began to develop Putin created seven federal districts under presidential friendships with Western leaders. The West in turn appointees. His explicit purpose was to consolidate welcomed the emphasis on reform and gave active support ‘the structures of the presidential vertical of power through multilateral and bilateral programmes. Russian in the territories’.4 foreign policy, said Putin in his 2001 annual address, should be based on ‘clearly defined national priorities, pragmatism Putin’s proclaimed objective on coming to power was and economic effectiveness’.7 Economic interests should be not to change Russia’s direction of travel, but rather to protected. A good reputation was important: ‘this is why we use a stronger state as a more effective instrument of must fulfil all our long-term commitments and agreements’.8 modernization. He sought to combine ‘the universal principles of a market economy and democracy with At this stage Putin did not see a conflict between Russia’s Russian realities’.5 Russia’s place in the world depended interests in the ‘near abroad’ (the former Soviet states on its on the success of economic reform. In asserting in his borders) and closer relations with the West. While he gave 9 Millennium manifesto that Russia ‘was and will remain a top priority to ‘further integration in the CIS’, he described great power’, Putin stressed that in the modern world might integration with Europe as ‘one of the key areas of our did not depend on military strength but on the ability of a foreign policy’: ‘our efforts to build up a partnership with 10 country to create and use advanced technologies, ensure the European Union will become even more important’. the wellbeing of its people, protect its security and uphold Year after year, Putin wanted to speed up the process of its interests in the international arena. In his annual address acceding to the World Trade Organization (which was not of 2003, he said that the ‘ultimate goal’ of returning Russia finally achieved until 2012). ‘to its place among the prosperous, developed, strong and He put down markers that Russia wanted its place in the respected nations … will only be possible when Russia gains world to be respected, and its voice to be heard in decision- economic power. … We can achieve this kind of Russia making, but stated the case in much milder terms than only through sustainable and rapid growth.’ This in turn he was to use later. In his 2001 annual address, he asked depended on producing competitive goods and services Russia’s international partners to acknowledge Russia’s

4 Annual address to the Federal Assembly, 8 July 2000. 5 ‘Millennium’ manifesto, 29 December 1999. 6 Ibid. 7 Annual address to the Federal Assembly, 3 April 2001. 8 Ibid. 9 In 2000 the Commonwealth of Independent States comprised Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan and Uzbekistan. Ukraine had been a founding member in 1991 but refused to ratify the CIS charter in 1994, and had the status of a participant but not an official member. 10 Annual address to the Federal Assembly, 3 April 2001.

Chatham House | 3 The Russian Challenge Russia’s Changed Outlook on the West: From Convergence to Confrontation

interests in ‘strategic stability, disarmament, NATO closer geographically, but also economically and spiritually. expansion and forming the foundations of the world order … This means new markets and new investment. Generally in the twenty-first century’. NATO should uphold the terms it means new possibilities for the future of Greater Europe.’11 of the 1997 Founding Act and should not ignore the opinion Most strikingly, Putin chose not to make a big issue of the of the international community. enlargement of NATO. He had put down a marker that ‘we By 2002, in the wake of the 9/11 attacks on the United see the CIS area as the sphere of our strategic interests’ and States, and with Russia’s economy improving, Putin was ‘tens of millions of Russians live in these countries’.12 The optimistic in his annual address that the international NATO applicants came from outside the CIS, and the subject attitude towards Russia was changing: of NATO’s expansion was conspicuously absent (bar his one glancing reference in 2001) from the set-piece annual the period of confrontation has ended. We are building constructive, normal relations with all the world’s nations … in the world today, no addresses of Putin’s first term. one intends to be hostile towards us … After 11 September last year, Russian officials and generals made clear privately that the many, many people in the world realized that the ‘cold war’ was over applications, in particular, of the three Baltic states to join … a different war is on – the war with international terrorism. … Our major goal in foreign policy is to ensure strategic stability in the NATO, together with those of yet more former members of world. To do this, we are participating in the creation of a new system the Warsaw Pact (Bulgaria, Romania and Slovakia), were of security, we maintain constant dialogue with the United States, deeply unwelcome. However, in the wider context of closer and work on changing the quality of our relations with NATO. … integration with Europe and the United States and of a Russia is being actively integrated into the international community. strengthened Russia–NATO relationship, the Kremlin chose Russia’s active support for the United States after 9/11 was not to make strong public objections or by other means to rewarded by full membership of the G8 and the upgrading obstruct the process. of the NATO–Russia Council at a specially convened summit Ten days before NATO’s Prague summit of November in 2002. In 2003 Putin became the first Russian leader since 2002 was to approve the accessions, Putin met NATO the Victorian era to be invited to the UK on a state visit. Secretary-General George Robertson in Brussels. He Putin’s 2003 annual address followed the US-led invasion expressed satisfaction with the work of the NATO–Russia of Iraq. He referred obliquely to this, but refrained from Council and confirmed that Russia would be represented attacking the United States by name: ‘Terrorism threatens at the Council’s meeting in Prague by Foreign Minister the world and endangers the security of our citizens. Igor Ivanov. He hoped that the enlargement would not Certain countries sometimes use their strong and well- ‘undermine the military stability and security in the armed national armies to increase their zones of strategic common European space, or damage or prejudice the influence rather than fighting these evils we all face.’ national security interests of Russia’. He appreciated the existing cooperation, but ‘Russian military organizations In 2003 he reiterated his optimism of the previous year take their own view of this situation and they make that Russia had taken ‘some big steps forward on the road assessments of the possible deployment of forces to the to international integration’. It had become a full member territory that is affected by enlargement’. of the G8 and was taking part in the global partnership on non-proliferation of weapons of mass destruction, making Putin was asked by a journalist whether Russia might progress towards joining the WTO and improving its credit possibly join the Alliance. He replied that the matter had rating. Russia valued the anti-terrorist coalition. The policy never been raised, but added that, if cooperation continued of developing a strategic partnership with the European to develop and NATO continued to transform in a way that Union was gradually being realized. corresponded with Russia’s security interests, Russia could consider ‘a broader participation in that work’.13 Throughout his first term, Putin avoided clashing with the West over the ‘near abroad’. He placed a benign In sum, during its first term the Putin administration’s interpretation on the enlargement of the European Union perspective of Russia’s relationship with the West broadly up to the borders of Russia. Estonia, Latvia and Lithuania reflected the obverse view from West to East. There were – all former Soviet republics – and five countries formerly some sharp points of disagreement, but the across-the- within the Warsaw Pact joined the EU on 1 May 2004. In board hostility of the Cold War appeared to be a thing of his annual address three weeks later, Putin declared: ‘The the past. Extensive contacts had developed between non- expansion of the European Union should not just bring us state actors of every kind. Integration was the leitmotif. Strategic partnership was the goal.

11 Annual address to the Federal Assembly, 26 May 2004. 12 Annual address to the Federal Assembly, 16 May 2003. 13 Joint press conference of President Putin and NATO Secretary-General George Robertson, Brussels, 11 November 2002.

4 | Chatham House The Russian Challenge Russia’s Changed Outlook on the West: From Convergence to Confrontation

About turn: divergence and confrontation to the state-owned Rosneft chaired by Igor Sechin16 – was a signal that the tensions between reform and state power From the middle of 2003, it became increasingly apparent were being resolved in favour of the latter. Khodorkovsky that the mood in the Kremlin was changing. Russia was was not only the independently minded head of one of becoming richer. The urge to restore its historical role as Russia’s most successful private-sector corporations. He was an independent Great Power and to reverse the perceived also a man with political ambitions who had not been afraid humiliation of the years of weakness since 1991 was to challenge Putin in public. strongly felt. The balance of power within the upper echelons shifted towards hard-liners opposed to reformist Since his election, Putin had incrementally and Westernizing tendencies. Policy began to move away used the presidential powers embodied from Putin’s proclaimed goal of closer integration with in Yeltsin’s 1993 constitution to bring the the West and towards a very different model. legislature, judiciary, media and regional administrations under ever-tighter Kremlin Internal governance: the state versus civil liberties control. From the middle of 2003 it became There had always been a tension between Putin’s evident that these powers were being used determination to rebuild a strong state, with the president not for the modernization of Russia, but for at the apex of a vertical of power, and the democratic values which he claimed to espouse. The concept of the consolidation of power and wealth in the ‘loyal opposition’ – that politicians or the media or non- hands of Putin and his close associates. governmental organizations can criticize a government’s actions without their loyalty to the nation being called into The Duma elections of December 2003 were another question – is hard to transplant and not one that someone indicator – so heavily manipulated that the combined of Putin’s background can easily understand. Speaking representation of the liberal Yabloko and SPS parties fell in 2000 about civil society, Putin had asserted: ‘We are from 51 seats to seven.17 In February 2004 the liberal prime not always able to combine patriotic responsibility for the minister, Mikhail Kasyanov, was replaced by the reactionary destiny of our country with what Stolypin once called “civil Mikhail Fradkov (a former official of the Soviet Ministry liberties’’.’ He had concluded that work was needed for civil of Foreign Trade and since 2007 the head of the Foreign society to ‘become a full partner of the state’.14 Likewise, Intelligence Service, the SVR). The presidential election while calling for free media, he had criticized (not without in the following month was little more than cosmetic, reason) the dependence of the media on the commercial with Putin facing a field fairly described as Lilliputian and political interests of owners and sponsors who allowed and claiming 72 per cent of the vote. Some reformers the media to be used as ‘a means of mass disinformation, a were dismissed; some drifted out of the administration means of fighting the state’. His solution was for the state voluntarily in the period that followed; some have to ‘create legal and economic conditions … for civilized remained to this day, but have been marginalized. information business’.15 Since his election, Putin had incrementally used the Economic policy: the state versus free enterprise presidential powers embodied in Yeltsin’s 1993 constitution Whereas the administration had accomplished some to bring the legislature, judiciary, media and regional important structural reforms during Putin’s first term administrations under ever-tighter Kremlin control. From (including legislation for the freehold ownership of land, the middle of 2003 it became evident that these powers reforms to the judicial system and the break-up of the state were being used not for the modernization of Russia, but power-generation monopoly), it became clear in the course for the consolidation of power and wealth in the hands of of 2004 that further restructuring was off the agenda. In Putin and his close associates. 2000, Putin had called for protection of property rights, The Yukos affair – the arrest of Platon Lebedev in July equality of conditions of competition, and the freeing of 2003 and of Mikhail Khodorkovsky in October, and the entrepreneurs from administrative pressure, corruption subsequent transfer of the assets of the Yukos oil company and ‘excessive intervention by the state in spheres where

14 Annual address to the Federal Assembly, 8 July 2000. 15 Ibid. 16 Sechin had worked with Putin in the mayor’s office in St Petersburg. He was a deputy head of the presidential administration during Putin’s first two terms as president, also becoming chairman of Rosneft in July 2004. 17 The Organization for Security and Co-operation in Europe declared the elections to be ‘free but not fair’ and said they had failed ‘to meet many OSCE and Council of Europe commitments for democratic elections’.

Chatham House | 5 The Russian Challenge Russia’s Changed Outlook on the West: From Convergence to Confrontation

it should not be present’.18 There had been little progress Many factors contributed to the deterioration of towards these objectives, and from 2004 the idea of reducing Russia’s relations with the West; and the process was not the state’s role was reversed. It became the policy instead uniform – relations with the United States and the United to bring the commanding heights of the economy under Kingdom moved on a different trajectory from those the control of large organizations (many owned wholly or with, for example, Germany and France. The Kremlin felt substantially by the state) which were directed by people inadequately rewarded for its support of the United States close to the Kremlin. This enabled the people in power to after 9/11, with the latter reluctant to engage in bilateral siphon off a great deal of the nation’s wealth at the expense negotiations on ‘strategic stability’. Instead the Bush of the modernization of the economy, the private sector administration withdrew from the Anti-Ballistic Missile and entrepreneurship. ‘Diversification’ of the economy (ABM) Treaty in June 2002 and developed plans to deploy became little more than a slogan, while the administration a missile defence system in Europe, with installations in relied ever more heavily on resource nationalism. The role Poland and the Czech Republic, which caused growing of privately owned small and medium-sized enterprises in concern in Moscow. the Russian economy has remained pitifully low. Chechnya was a running sore. Putin portrayed the conflict If there was one factor above others that triggered this as Russia fighting on Europe’s front line against Islamist change of direction, it was the rise in the oil price, which terrorism, and was visibly angered by criticism of Russian tripled (in real terms) between 1998 and 2004.19 With methods (including questions raised about the deaths of 130 its new wealth, the Kremlin felt able to ignore both hostages in the Dubrovka theatre siege of October 2002). The economic liberals at home and advice from abroad. Russian authorities objected that a political representative (A notable example of the latter was a speech in Moscow of the Chechens, Ahmed Zakayev (a former theatre director in June 2004 by the economist Stanley Fischer, who had and culture minister) was able to travel freely in the West; given sympathetic attention to Russia during his time at after a British court rejected a Russian request for Zakayev’s the International Monetary Fund. Evidently concerned extradition in 2003, raids were mounted on British Council about the direction of policy, Fischer warned of the need offices in Russia in apparent retaliation. After a series of to continue structural reform, improve the investment terrorist acts in 2004 (the assassination of Chechen leader climate, demonstrate a clear commitment to the rule of law Ahmed Kadyrov in May, the Nazran raid in June and the and the protection of property rights, attack corruption, bombing of two airliners in July), the Kremlin lashed out reduce state intervention and promote competition.) against perceived enemies when over 300 hostages, half of them children, were killed in the mishandled Beslan school siege in September. Putin declared: External relations: the West as a competitor, not a partner We appeared weak. And the weak are beaten. Some want to tear away the fattest possible piece, while others help these aspirants In a speech in Moscow in December 2003, the former in so doing. They still believe that Russia poses a threat to them as Swedish prime minister Carl Bildt raised concerns: a nuclear power. That is why this threat must be eliminated, and terrorism is just another instrument in implementing their designs.21 Many in the West are questioning whether there has been a change in the direction of the development of Russia. … The events of the His close adviser Vladislav Surkov went further, accusing last few weeks of 2003 have demonstrated the risk of a crisis and foreign cold warriors of impeding a financial blockade and political confrontation in different vulnerable regions bordering the political isolation of the terrorists: ‘Their goal is the on both Russia and the European Union. … Is Russia prepared to destruction of Russia and the filling of its huge area with continue in its efforts to pursue reform policies that will commit it to cooperation and integration with the rest of Europe? Will Russia numerous dysfunctional quasi-state formations.’ Surkov work to establish the rule of law, together with a political system pronounced that a ‘fifth column of left-wing and right- that is more democratic and less managed? wing radicals’ had emerged in Russia – ‘fake liberals and real Nazis’ with ‘common sponsors of foreign origin’.22 In He warned that disagreement over Georgia could lead the wake of Beslan, though with no logical connection to to ‘the fracturing of the country with long-term and the siege, Putin announced that regional governors would serious consequences’.20 henceforth be appointed rather than elected: a step away

18 Annual address to the Federal Assembly, 8 July 2000. 19 In 1999, oil and gas revenues contributed $40.5 billion to Russia’s GDP. From 2001 to 2004, the contribution averaged $73.5 billion annually, and between 2005 and 2008 it averaged $264 billion. The figure reached an average of $437 billion in 2011–13. Quoted in Vladislav Inozemtsev, ‘Building Russia’s European Home’, Gulfnews.com, 8 January 2015. 20 Carl Bildt’s December 2003 speech was published as an article in Russia in Global Affairs, February 2004. 21 Address of 4 September 2004, accessed via http://kremlin.ru/events/president/transcripts/22589. 22 Interview with Deputy Head of the Presidential Administration Vladislav Surkov, Komsomolskaya Pravda, 29 September 2004, quoted in Eurasia Daily Monitor, 30 September 2004.

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from democracy which drew criticism from US President Kozyrev, who favoured closer relations with the West, George W. Bush and Secretary of State Colin Powell. insisted that ‘the states of the CIS and the Baltics constitute the area of concentration of Russia’s vital interests’ and At the centre of the widening rift between Russia and the warned (in April 1995) that ‘there may be cases when the West, as Carl Bildt had perceived, lay both a direct conflict use of direct military force may be needed to protect our of interests over what the EU termed its ‘new neighbours’ compatriots abroad’.24 and Russia its ‘near abroad’, and value systems which were becoming impossible to reconcile. The flaws and The conflict of interests remained latent until late 2003. The contradictions in Putin’s approach to integration were focus of East–West relations up to that point was on healing coming to the surface. the division of Europe and building bridges between Russia and Western organizations and states. Putin, as noted, had set parallel objectives of further integration in the CIS and Conflicting interests in the ‘post-Soviet space’ integration with Europe. Since the collapse of the Soviet Union, there has been In November 2003, the Kremlin suffered two reverses a latent conflict of interests between the West and in neighbouring states. In divided Moldova, a plan for Russia over the status of the other 14 post-Soviet newly a settlement on Russian terms brokered by Putin’s aide independent states. In the Western view, the sovereignty Dmitry Kozak was rejected by President Vladimir Voronin of these states is paramount, and they must be free after the EU and the United States had lobbied against the to determine their own affiliations without threat or deal. More ominously for Moscow, in Georgia Russia was coercion. In the UN Charter, the 1990 Charter of Paris, unable (despite last-minute diplomatic efforts) to prevent the 1994 Budapest Memorandum and numerous other the pro-American Mikheil Saakashvili from supplanting agreements, Russia pledged to respect their independence, President Eduard Shevardnadze in the Rose Revolution. sovereignty and territorial integrity. In the Russian view, these states are to a greater or lesser extent historically In March 2004 (a fortnight after Putin’s re-election as part of Russia, acquired independence accidentally rather president) Estonia, Latvia and Lithuania became members than through a formal settlement of the post-Cold War of NATO. While Putin had accepted in 2002 that this would order, are intimately linked to Russia through myriad happen, and the decision did not involve the installation personal and economic connections, and form Russia’s of new NATO bases in the Baltic states, the intrusion – to security perimeter. They must therefore be recognized as Russian eyes – of NATO into territory formerly part of within Russia’s ‘sphere of strategic interests’, and must not the Soviet Union was another negative step at a time of be permitted to act in ways or form affiliations that are worsening relations with the West. deemed to be contrary to Russia’s strategic interests. The year ended with the Orange Revolution in Ukraine. The two views cannot be reconciled. The presidential election of 21 November 2004 was perceived to have been rigged in favour of Viktor Yanukovych. After The attitude of the Putin administration is not a new popular protests, the Supreme Court ruled that a second departure. When Yeltsin formed the Commonwealth of election should be held. This produced a clear victory on Independent States (CIS) in December 1991 with the 26 December for Viktor Yushchenko. presidents of Ukraine and Belarus, the Russian leadership intended it to be a vehicle to maintain common defence The Orange Revolution, especially, led to a clear and arrangements and a common economic space across most lasting change in Putin’s outlook. He had intervened of the former Soviet Union. Fearful of the consequences of directly on behalf of Yanukovych in the election campaign. the sudden fragmentation of a nuclear-armed superpower, The result was seen in Moscow as a personal humiliation Western governments supported the formation, under for him and damaged his authority. Many saw the Russian leadership, of the CIS as an instrument of Orange Revolution as an existential threat to Putin’s stabilization. Senior Russians made clear in private that administration: the spectacle of successful popular revolts they still expected to exercise a dominant influence.23 in neighbouring countries overturning corrupt and Russia acknowledged the independent status of the new autocratic regimes was an alarming precedent which the members of the United Nations de jure but found it hard Kremlin did not wish to see repeated in Russia. Worst of to accept de facto. Even Yeltsin’s foreign minister, Andrei all, liberal Western-oriented leaders had been elected in

23 Sir Rodric Braithwaite, then British Ambassador to the USSR, has recorded that in 1991 President Gorbachev’s (liberally inclined) diplomatic adviser told him that: ‘In a decade or two decades, Russia will reassert itself as the dominant force in this huge geographical area. Meanwhile Yeltsin will have no choice but to assert Russia’s position if it is challenged: his entourage will see to that. So if the Ukrainians are too provocative – over the Crimea, for instance – he will have to weigh in with force of necessary. That is in no one’s interest.’ Rodric Braithwaite, ‘Russia, Ukraine and the West’, The RUSI Journal, 159:2, May 2014, p. 1. 24 Quoted by Robert Blackwill in ‘Russia and the West’ in Robert Blackwill, Rodric Braithwaite and Akihiko Tanaka: Engaging Russia: A Report to the Trilateral Commission: 46, The Triangle Papers Series (New York: The Trilateral Commission, 1995), pp. 7–8.

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Ukraine and Georgia with open political support from the Munich speech as a threat. NATO expansion, he asserted, West. Putin appears to have been encouraged to believe did not relate to modernization of the Alliance or ensuring that the uprisings were neither spontaneous nor internally security in Europe, but represented ‘a serious provocation generated, but had been organized by malign forces from that reduces the level of mutual trust … against whom is this the West. He evidently felt that he had been betrayed by expansion intended? And what happened to the assurances the United States and other Western governments whose our Western partners made after the dissolution of the friendship he had cultivated. His policy of bridge-building Warsaw Pact? … Now they are trying to impose new dividing had not borne the fruit he desired. lines and walls on us.’27 Having convinced himself that the United States and its In 2008 the clash of interests in the post-Soviet space allies were bent on ‘tearing’ Ukraine, Georgia and other turned into conflict. There were two precursors. First, in states away from Russia, Putin abandoned thoughts of February 2008 Kosovo declared its independence from partnership with the United States and NATO. He built the Federal Republic of Yugoslavia. This was opposed by up the perception that they were encroaching on or Russia (still bitterly resentful of NATO’s military operation seeking to encircle Russia, and announced a programme over Kosovo in 1999) but recognized by most Western of rearmament in response. Russia reverted to the role of states. Secondly, in April the NATO summit in Bucharest competitor and opponent to the West. declined applications from Georgia and Ukraine to join the Membership Action Plan (MAP – the official pathway Thus in Putin’s annual address in 2006 he declared that ‘the to membership), but agreed to ‘intensive engagement’ arms race has entered a new spiral’ through new technology about their applications, welcomed their aspirations for and ‘the danger of the emergence of a whole arsenal of so- membership, and ‘agreed that these countries will become called destabilizing weapons’; and that ‘far from everyone members of NATO’. The Bucharest compromise papered in the world has abandoned the old bloc mentality and the over a rift between the Bush administration, which favoured prejudices inherited from the era of global confrontation’. Georgian and Ukrainian membership, and some European He announced a plan for the restructuring of the Russian NATO members led by Germany, which thought that this armed forces and a large increase in defence procurement, would be premature and dangerous. The mixed signal including an increase in the strategic nuclear force, in order pleased no one and had a disastrous effect: it appeared to ‘respond to attempts from any quarters to put foreign to substantiate Russian fears that NATO was bent on policy pressure on Russia’.25 ‘capturing’ Georgia and Ukraine. In the following year, Putin made headlines with an outspoken attack on the United States at the annual Munich In August 2008 Russia responded to Security Conference. He denounced the ‘pernicious’ concept Georgia’s NATO aspirations with force. After of a unipolar world, with ‘one master, one sovereign’, which had been ‘proposed after the Cold War’. ‘Unilateral five years of intermittent harassment of the and frequently illegitimate actions … have caused new Westernizing and US-backed Saakashvili human tragedies. … Today we are witnessing an almost administration, it lured Georgia into a uncontained hyper use of force – military force – in short, ugly and ill-judged war. international relations, force that is plunging the world into an abyss of permanent conflicts … the United States has President Putin met NATO leaders in Bucharest and stated overstepped its national boundaries in every way.’ Putin Russian opposition to Georgian and Ukrainian membership, cited plans for the militarization of outer space and the to plans for missile defence installations in Poland and the anti-missile defence system in Europe as well as Western Czech Republic, and to recognition of Kosovo. Three days 26 pressure on Russia to comply with the CFE Treaty by later, he held the last of 28 meetings with President Bush removing its bases from Georgia and Moldova. and continued to argue in vain for a joint missile defence The NATO with which Putin had sought broadening programme in place of the US scheme. A relationship that cooperation in his first term was depicted in his 2007 had started warmly in Ljubljana in 2001 had soured long before its cool end in Sochi in 2008.

25 Annual address to the Federal Assembly, 10 May 2006. 26 The Treaty on Conventional Armed Forces in Europe, signed by 16 NATO and six Warsaw Pact states on 19 November 1990. 27 Russian policy-makers have long argued that the West gave, and then broke, assurances that NATO would not enlarge. Contradictory accounts have been produced of conversations between Western and Soviet leaders in 1990–91. The critical point is that there was never any written agreement on this subject. The first three new members, Poland, Hungary and the Czech Republic, did not join NATO until 1999. By then, NATO had taken steps to allay Russian concerns. These included commitments not to deploy nuclear weapons on the territory of the new members and not permanently to station substantial combat forces further east. In 1997 Russia and NATO signed the ‘Founding Act’ in which they declared that they ‘do not consider each other as adversaries’ and defined mechanisms for cooperation, joint decision-making and joint action, including the NATO–Russia Permanent Joint Council.

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In August 2008 Russia responded to Georgia’s NATO In the following year, the newly elected Obama aspirations with force. After five years of intermittent administration tried to restore a wide-angled cooperative harassment of the Westernizing and US-backed US–Russian partnership in its ‘Reset’ initiative of 2009. Saakashvili administration, it lured Georgia into a In a similar vein, the EU–Russia summits of 2009 and short, ugly and ill-judged war. Russia sought to justify 2010 launched a ‘Partnership for Modernization’. These the subsequent ‘independence’ declarations by South initiatives leaned heavily on an optimistic belief that Ossetia and Abkhazia as legitimized by the example of Medvedev, as president, would have the latitude to turn Kosovo. The West was accused of violating Yugoslavia’s back towards the course of integration and modernization. territorial integrity but standing up for Georgia’s. That turned out not to be the case: Putin continued to be the ultimate arbiter. Apart from a new Strategic Arms Russian leaders were frank about their motives in going to Reduction Treaty (START) in 2010, the ‘Reset’ sank war with a small neighbour which posed no threat to their almost without trace. country. Defence Minister Anatoliy Serdyukov described Georgia as part of Russia’s ‘zone of influence’. Foreign The divergence between Russia and the West became Minister Sergei Lavrov claimed ‘historically conditioned more marked from 2011. The West took exception to Russian mutually privileged relations’ with the ex-Soviet neighbours. support for the Assad regime in Syria; Russia objected Dmitry Medvedev, newly installed as the titular president of to Western policy across the Middle East, including the Russia, said that the conflict ‘was made possible in part by use of NATO airpower in Libya to facilitate the ouster of the conceit of an American administration that closed its ears Muammar Gaddafi. The Magnitsky and Snowden affairs to criticism and preferred the road of unilateral decisions’. added bitterness to US–Russian relations, just as the murder Medvedev railed against ‘the installation of military bases of Alexander Litvinenko in London in 2006 continues to be around Russia, the unbridled expansion of NATO’, and an issue in UK–Russian relations.30 In vivid contrast to the threatened to respond to US missile defence plans by policy of his first term, Putin’s first action on beginning his deploying Iskander missiles in Kaliningrad and jamming US third presidential term in the spring of 2012 was to boycott installations from there.28 Facets of Soviet diplomacy seemed the Washington summit of the G8 (the diplomatic top table to be back in play: the ‘principle of reciprocity’; ‘retaliatory which he had striven to join): so much for the ‘Reset’. In measures’; and limitation of the sovereignty of countries September 2012 US presidential candidate Mitt Romney held to be within Russia’s ‘zone of influence’.29 labelled Russia ‘our number one geopolitical foe’. Medvedev also proposed that there should be a new European security treaty to provide a common set of rules. Irreconcilable values His terms, vague as they were, appeared to offer Russia the Conflicting values do not prevent states from right to exercise a veto over NATO membership. As such cooperating where their interests so dictate (whether in they were of no interest to the West. trade or in opposing common threats or in cultural and Surprisingly, Russia’s 2008 conflict with Georgia did interpersonal exchanges of many kinds); but the form of not lead to a fundamental reassessment of the Western strategic partnership with post-communist Russia mooted approach. French President Nicolas Sarkozy hastily stitched by Western Europe and the United States was predicated together an agreement that satisfied Putin (and that has on a broad alignment of values. left Russian forces in occupation of two regions within Partnership assumed that Russia was embracing what Georgia’s sovereign borders, Abkhazia and South Ossetia); Putin himself called ‘European’ values – enshrined in the and Europe returned to business as usual, having launched European Convention on Human Rights and the Council negotiations for a new agreement with Russia (to replace of Europe (to which the Russian Federation acceded in the Partnership and Cooperation Agreement of 1997) two 1996); the values of ‘democracy, a law-based state, and months before the war in Georgia.

28 Annual address to the Federal Assembly, 5 November 2008. 29 The ‘Brezhnev doctrine’ of limited sovereignty was an attempt to justify the USSR’s right to intervene by force in other socialist countries. After the Soviet invasion of Czechoslovakia, Leonid Brezhnev declared: ‘When forces that are hostile to socialism try to turn the development of some socialist country towards capitalism, it becomes not only a problem of the country concerned, but a common problem and concern of all socialist countries’ (speech in Warsaw, 13 November 1968). The doctrine was abandoned by President Gorbachev. 30 Sergei Magnitsky was a Russian lawyer, who was known for uncovering massive fraud committed by Russian officials. After reporting the corruption to the authorities, he was detained in 2008 on suspicion of aiding tax evasion. His colleagues at Hermitage Capital Management, where he was a legal adviser, insist the charges were fabricated. He died in prison less than a year into his detainment after being subjected to torture and beatings. An official investigation into his death was ordered by the then President Dmitry Medvedev in 2009, but was dropped in 2013. Despite his death he was pronounced guilty of tax fraud in 2013. In December 2012, after pressure from Magnitsky’s former boss Bill Browder, the US Congress adopted the Magnitsky Act, which allows the US to withhold visas and freeze the financial assets of Russian officials believed to have been involved in human rights violations. In retaliation Russia banned Americans from adopting Russian orphans under the ‘Dima Yakovlev Law’. In 2013, the former CIA employee and NSA contractor Edward Snowden leaked NSA and other intelligence files on US intelligence operations against allied countries to the media. Snowden fled the US and ended up in Moscow, where he was granted one-year temporary asylum status, which is annually renewable.

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personal and political freedom’ proclaimed by Putin in his of territory in a manifest breach of international law, the Millennium manifesto, and before that by Yeltsin. widening rift with the West has become a direct confrontation. It is now beyond question that the values espoused by Self-evidently the Kremlin has moved a very long distance the Putin regime and the methods by which it pursues its away from these values, with a rubber-stamp legislature, interests abroad cannot be reconciled with partnership. tightly controlled elections, state-controlled courts, curbs on freedom of expression, and repression of dissent, Today’s Putinist model departs from the integrationist and opposition movements and NGOs, to the point where modernizing aspirations of 1990–2004, but is not genuinely Russia’s continued membership of the Council of Europe ‘new’. It is reactionary rather than innovatory; not geared to has come under question. the future but inspired by the past – by Russia’s history in the 18th and 19th centuries with elements of the Soviet legacy Where once the Russian leadership used to claim that added in. What are its distinguishing features? it shared and was part of Europe’s value system, it has relapsed into the Soviet practice of responding to criticism It is the model of an independent Great Power resuming with accusations of double standards and demands to cease its position on its own terms. In Putin’s words, ‘Russia is a interference in Russia’s ‘internal affairs’. Foreign Minister country with a history that spans more than a thousand Lavrov has asserted that the Westphalian system ‘placed years and has practically always used the privilege to carry differences in values beyond the scope of intergovernmental out an independent foreign policy.’36 He depicts Russia relations’31 (an argument that would have been approved by as one of a small group of states that could claim to be his Soviet predecessor Anatoliy Gromyko). Putin has spoken sovereign: ‘China, India, Russia and a few other countries. of ‘an increasing influx of money from abroad being used to All other countries are to a large extent dependent either intervene directly in our internal affairs’, and warned that on each other or on bloc leaders. … Russia will either be ‘“civilization” has been replaced by democratization, but independent and sovereign or will most likely not exist at the aim is the same – to ensure unilateral gains and one’s all.’37 For Russia ‘true sovereignty … is absolutely necessary own advantage, and to pursue one’s own interests’.32 When for survival’.38 announcing the annexation of Crimea he described domestic Russia’s power, in this model, rests on a triad: renewed critics as a ‘fifth column’ and a ‘disparate bunch of national economic strength (stemming from natural resources); the traitors’ (echoing the inflammatory language used by Surkov armed forces (in which the administration is now investing in 2004, after Beslan). In March 2015 he claimed that: heavily, after a long period of decline); and an ideology Western special services do not give up their attempts to use non- of nationalism and patriotism, infused by history and the government groups to discredit Russian authorities and destabilize Orthodox Church (intertwined with the state as it was in the internal situation in Russia. They are already planning actions Tsarist times). for the period of the forthcoming elections in 2016 and 2018.33 The state is authoritarian and founded on a single Referring to opposition movements, Putin said that ‘it makes institution, the ‘vertical of power’ reaching downwards no sense to argue with those who work on orders from from the president through the bureaucracy and the outside, who serve the interests of not their nation but an security organs. Citizens enjoy many more civil liberties alien nation or nations’.34 than in Soviet times, but not universally and only to the extent that they do not challenge the control of the ruling The new model Russia: Putinism in 2015 group. The disabled and orphaned are underprivileged; homosexuals are sanctioned; racism is rife; adherents of minority religions (including Russia’s large Muslim The foreign policy of President Vladimir Putin’s Russia seems to be writing a new chapter in a book we thought we had closed a population) are vulnerable. long time ago. Putin’s model straddles the line between patriotism and 35 Norbert Röttgen, Chairman of the Bundestag Foreign Affairs Committee ugly expressions of nationalism and xenophobia (for The crisis in Ukraine is explored in the chapter by James Sherr. which populist movements linked to the Kremlin have As a result of Russia’s use of armed force and annexation become notorious). The ‘historical military memory of

31 Article in Russia in Global Affairs, August 2007. 32 Annual address to the Federal Assembly, 26 April 2007. 33 Federal Security Service board meeting, 26 March 2015, accessed via http://en.kremlin.ru/events/president/news/49006. 34 Ibid. 35 ‘Germany Should Be a Leader on the World Stage’, Financial Times, 21 March 2014. 36 Speech to the Munich Security Conference (Wehrkunde), February 2007. 37 Meeting with the Valdai Club, 14 September 2007. 38 Annual address to the Federal Assembly, 4 December 2014.

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the Fatherland’39 is to be preserved. He has spoken of They facilitated the armed coup.’46 Had Russia not acted Russia’s ‘civilizing mission on the Eurasian continent’.40 in Ukraine, NATO’s navy would have been in the port Russia’s traditional values stand in opposition to Western of Sevastopol in Crimea, creating ‘not an illusory but a liberalism, which is treated as subversive. In the Middle perfectly real threat to the whole of southern Russia’.47 East, according to Putin, the ‘destruction of traditional Under the pressure of recent events, Putin has taken to values’ and ‘progressive’ models of development have repeating the accusation he first made after the 2004 resulted in barbarity.41 Beslan massacre that the West is supporting terrorism in Russia. This surfaced in his remarks to the Valdai Club in Putin’s model straddles the line between October 2014, in his annual address of December 2014, patriotism and ugly expressions of and in his press conference of 18 December, when he said: nationalism and xenophobia. ‘After the fall of the Berlin Wall and the break-up of the Soviet Union, Russia opened itself to our partners. What This model reflects a deep sense of insecurity. A fear did we see? A direct and fully-fledged support of terrorism that Russia would be threatened if it lost control of its in North Caucasus. They directly supported terrorism … neighbourhood: ‘It is not just about Crimea but about us this is an established fact.’ He has never quoted evidence protecting our independence, our sovereignty and our right to substantiate his ‘established fact’. 42 to exist.’ A fear of Western ideas and exemplars. A fear of In response to the perceived threat, Putin stresses the the infiltration of Islam (not just Islamist extremism) from need to strengthen Russia’s defences: ‘The ramping up the Caucasus and Central Asia. And an unpublicized fear of high-precision strategic non-nuclear systems by other that China’s growing power casts a shadow over the thinly countries, in combination with the build-up of missile populated and economically vulnerable Russian Far East defence capabilities, could negate all previous agreements (knowing that the Chinese have not forgotten that they … and disrupt the strategic balance of power.’ 48 Russia were obliged to cede 1.5 million square kilometres to the would respond to these challenges, including through high- Tsar in the mid-19th century). precision weapons systems and new strategic missiles. No Putin’s own language, which at times verges on the one would ‘ever attain military superiority over Russia’.49 paranoid, reveals a defensive mentality. To justify his Russia retains a capacity to use military power both for authoritarian control and aggressive tactics on Russia’s demonstrative effect (as on the borders of NATO) and to periphery, he has painted a picture of Russia as a victim play a role (through the supply of equipment, intelligence and target of Western attack over the centuries: ‘the and advisers, or limited deployments) in regional conflicts, infamous policy of containment, led in the eighteenth, such as Syria; but the primary purposes of Russia’s forces nineteenth and twentieth centuries, continues today. are to defend and maintain security within Russia; and to 43 They are constantly trying to sweep us into a corner.’ dominate – to the exclusion of others – Russia’s perimeter. When the USSR broke up, Russia ‘was not simply robbed, it was plundered’.44 The Americans ‘decided they were The perimeter is the former Soviet Union, claimed by Russia the winners, they were an empire, while all the others as a zone of influence and within its strategic interests. Putin were their vassals. … They never stopped building has sought to justify his case partly in terms of a duty to walls.’45 The Western partners, led by the United States, protect the ‘tens of millions’ of ‘compatriots’ who have opted had ‘controlled’ a whole series of ‘colour revolutions’. In to remain in other sovereign states – principally Ukraine, Ukraine in 2014, ‘outwardly the opposition was supported Belarus, Latvia, Estonia and Moldova. He has unilaterally mostly by the Europeans; but we knew for sure that the claimed them as ‘co-citizens’50 and has asserted rights to real masterminds were our American friends. They helped intervene on their behalf (and for the most part not at their train the nationalists, their armed groups, in Western request) that go far beyond the limits of international law. Ukraine, in Poland and to some extent in Lithuania.

39 Annual address to the Federal Assembly, 12 December 2012. 40 Annual address to the Federal Assembly, 26 April 2007. 41 Annual address to the Federal Assembly, 12 December 2013. 42 Press conference, 18 December 2014. 43 Address on the annexation of Crimea, 18 March 2014. 44 Ibid. 45 Press conference, 18 December 2014. 46 Documentary programme broadcast on the Russian television channel Rossiya, 14 March 2015. 47 Address on the annexation of Crimea, 18 March 2014. 48 Annual address to the Federal Assembly, 12 December 2012. 49 Annual address to the Federal Assembly, 4 December 2014. 50 Annual address to the Federal Assembly, 25 April 2005.

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The second leg of the Russian claim is historical and in the absence of alternatives or of accurate sources cultural. Putin constantly invokes ‘a thousand years of of information. There is evidence of widespread Russian history’. When annexing Crimea, he argued that dissatisfaction with corruption and living standards. Prince Vladimir’s ‘spiritual feat of adopting Orthodoxy A regime that felt genuinely secure would feel less predetermined the overall basis of the culture, civilization need to clamp down on critics and opponents. and human values that unite the peoples of Russia, Ukraine However, Putin’s regime is now facing its most serious and Belarus’. Crimea had ‘always been an inseparable challenges yet. part of Russia’. It was the Bolsheviks who had erroneously decided to add ‘large sections of the historical South of Russia to the Republic of Ukraine’.51 While it is true that As a tactic in his battles with the United Ukraine and Belarus had little or no previous history as States and Europe, Putin is trying to put states independent of Russia, the Kremlin’s argument himself at the head of a cabal fighting against cannot override the formal recognition of the new sovereign a ‘unipolar’ and liberal world and for a new states by the world, including Russia, in the 1990s; or the international order. The bedfellows he has legitimacy which attended the birth of today’s Ukraine following a 90 per cent vote for independence in the fairly assembled are ill-assorted and the thesis is conducted referendum of 1 December 1991. unconvincing. Although, as the past year has shown, many Russians The Kremlin has staked heavily on the confrontation with cherish a vision of reincorporating Ukraine and Belarus the West over Ukraine, and more generally over its right to (and probably Moldova) within a Greater Russia, and this a sphere of strategic interests in which Western influence cannot be excluded in the future, the current leadership and involvement would be limited. Putin has portrayed this does not appear to be bent on full annexation, which would as an existential struggle for Russia. He cannot afford to be entail costs it cannot afford. But under Putin’s model, the seen to step back. He has to deliver what he can portray as post-Soviet states must exercise their sovereignty within a victory. But the confrontation has been and will continue limits set by Moscow. The three Baltic states have escaped to be very costly. The longer it lasts, the harder it will be into a Western camp, but it is likely that they will continue to show that it is beneficial to Russia. Putin has to keep to be subjected to coercive pressures. As the examples of convincing his people that this is a fight for survival. Georgia and Ukraine have shown, any further Western intrusion into Russia’s zone will be vigorously opposed. Russia is short of allies. Most Russians are deeply uncomfortable with the possibility of becoming dependent, as a junior partner, on China. The Kremlin has raised Is Putin’s model sustainable? expectations of the BRICS group (five emerging or transitional powers which have little in common) and Vladimir Putin and his close associates have been of a pivot to Asia and the Pacific that cannot be fulfilled. remarkably successful in holding power for 15 years. As a tactic in his battles with the United States and Europe, Putin is trying to put himself at the head of a They have harvested the fruits of high oil prices. The cabal fighting against a ‘unipolar’ and liberal world and population is better off: consumption levels are about for a new international order. The bedfellows he has three times as high as in 1998 (although wealth is very assembled are ill-assorted and the thesis is unconvincing. unevenly spread, and the gap between the rich and the poor has widened). The ruling group controls the most The Kremlin is also betting heavily on an expensive build- important parts of the economy. It has kept a firm grip on up of Russia’s armed forces in contradiction of Putin’s the levers of power – civil administration, the armed forces earlier assertion that its power and status depended and, most importantly, the security organs. This will not on economic strength rather than military might. The be easily shaken. regime faces difficult decisions over the allocation of shrinking resources: will it cut back on social welfare, or Putin has made sure that no prominent figure or on infrastructure, or on support for large corporations opposition movement is in a position to contest power. (controlled by Putin’s associates) – or on the military? He has been astute in both responding to and guiding Carrying through another five years of rearmament the emotions of ordinary Russians, marshalling patriotic would overstretch the budget; but cutting it back risks fervour in the face of perceived external threats. The discontent in a powerful constituency. true level of popular support for Putin is hard to gauge,

51 Address on the annexation of Crimea, 18 March 2015.

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The traditional and authoritarian values promoted by Most crucially, the leadership has for a decade pursued the Kremlin do not sit easily with all Russians. Support for a strategy that – as both Russian economists and outside more democratic elections is not confined to the relatively experts warned – has led to economic stagnation. The decline small number of liberals. Many highly educated young set in well before the conflict began in Ukraine. Russia’s Russians have left the country or are seeking to leave. dependence on high prices for hydrocarbons has been cruelly It remains to be seen how far the emergent post-Soviet exposed. The consequences for Russia of the conflict with generation wishes to distance itself from Europe, which Ukraine – the effect on capital markets and trade, the impact has been a benchmark for Russian aspirations since the of sanctions and the heavy direct costs of Russian policy – end of communism. are weighing down an already ailing economy. Patriotism and propaganda may for a while obscure economic failure Meanwhile the nationalist demon is out of its cage. There (Putin has taken to making Orwellian boasts: ‘Our produce have been episodes of murderous inter-ethnic violence. is of course much better and healthier’53) but they do not Putin has warned in the past of: put bread on the table. a kind of Amoral International, which comprises rowdy, insolent people from certain southern Russian regions, corrupt This is not a model that will satisfy Russia’s aspirations to law enforcement officials who cover for ethnic mafias, so-called become one of the advanced powers of the modern world. Russian nationalists, various kinds of separatists who are ready Russians are famously resilient, and the country does not to turn any common tragedy into an excuse for vandalism and appear to be close to a tipping point. Over time, however, bloody rampage.52 declining real incomes and the lack of resources for social Reining in the destructive force of extremist nationalism and physical infrastructure, combined with the existing (including fighters returning from Ukraine) will be a resentment at the high levels of corruption, will generate difficult task. growing pressure for change.

52 Annual address to the Federal Assembly, 12 December 2013. 53 ‘We have managed to set up such poultry raising facilities that even Europe does not have. … Look at the situation with obesity in some countries. It is terrible. This has to do with food. Our produce is of course much better and healthier.’ Speech at a meeting of the State Duma in Crimea, 14 August 2014.

Chatham House | 13 3. An Enfeebled Economy Philip Hanson

Introduction including 2017.55 In March 2015 the government submitted to parliament a revised draft of the 2015 budget in which The Russian economy is in poor shape. Russia’s current the average annual oil price was assumed to be $50/b, the enfeeblement is not unique, even in Europe: the eurozone is average exchange rate was R61.5 to the US dollar, GDP also in trouble. Indeed, both Russia and the eurozone face fell by 3 per cent and consumer price inflation averaged strong doubts about the very systems on which they are 12.2 per cent. The revisions entailed additional spending based – Putinism and the common currency, respectively. cuts (from the version previously approved) to contain the The Russian systemic problem is politically less acute: its federal budget deficit to 3.7 per cent of GDP.56 leadership appears for the time being to be popular, and alternatives to Putinism and Vladimir Putin himself are not Figure 1: Russian real GDP, 2005–17 conspicuous. In two respects, however, it is more acute: (% year-on-year change) Russia has set itself against a large and influential part of the Optimistic scenario Worst-case scenario rest of the world and is correspondingly isolated; and, as a 10 medium-developed country with labour productivity about 8 two-fifths that of Germany, it is missing out on the potential 6 of rapid, long-term, ‘catch-up’ growth. 4 This chapter starts by setting out the main features of recent 2 and prospective Russian economic performance. Then 0 it reviews the influences on that performance, including -2 that of the recent events in Ukraine and the foreign

GDP % change p.a. -4 sanctions they have elicited. It finishes by suggesting some -6 implications for Moscow’s Great Power ambitions and for -8 Western policy. -10

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Economic performance Sources: Rosstat (historical data); CBR (2014–17 projections).

Russian real GDP fell steeply during the 2008–09 crisis. One consequence of these numbers is that Russia’s weight This was followed, as in many other countries, by a recovery in the world economy has recently edged downwards and that fell short of a return to pre-crisis rates of growth. Then is expected to continue to do so for a while at least. Figure there was a marked slowdown starting in 2012. The level of 2 illustrates this, using IMF projections for all of the four economic activity in 2014 was just 0.6 per cent above that original BRICs. China and India, the two less developed of of the previous year. Official expectations for the next two these countries, continue (and are expected to continue) years, exemplified in Figure 1 by Central Bank of Russia to increase their weight in the world economy. Russia and (CBR) projections of November 2014, are for recession Brazil are not. For Russia, with its leaders’ apparent belief and stagnation. in their country’s present and future Great Power status, this is of particular concern. Indeed, failing to increase the Those projections are from two, out of many, alternative Russian share of world output is sometimes treated as a CBR scenarios. The higher one is close to an earlier Ministry definition of stagnation. of Economic Development (MinEkon) baseline scenario, which was widely regarded as too optimistic and has since During the 1999–2008 boom household consumption was been revised downwards.54 The lower projection, as far as the main driver of Russian growth. Rising oil prices and the the period 2015–16 is concerned, is from the CBR’s worst- resultant rising inflows of petro-dollars made this possible, case scenario of 15 December 2014, in which the oil price but of the different sources of increments in final demand averages $60/barrel in both those years and then recovers; for Russian production, consumption predominated. The this also assumes that sanctions remain in place up to and improvement in Russia’s terms of trade, moreover, allowed real incomes and consumption to rise faster than output.

54 Ol’ga Kuvshinova and Margarita Papchenkova, ‘Minekonomrazvitiya prognoziruyet retsessiyu iz-za sanktsii i spada tsen na neft’ [‘The Ministry of Economic Development forecasts a recession because of sanctions and the fall in oil prices’], Vedomosti, 2 December 2014. 55 The ‘worst-case’ scenario produces a 2017 GDP 0.2% below the 2014 level; the more optimistic scenario generates a comparable figure of 0.6% above 2014 – not a dramatic difference. 56 See Deputy Finance Minister Aleksei Moiseev on 16 March on the new budget at http://www.minfin.ru/ru/press-center/?id_4=33119, and discussion by Ewa Fischer, ‘Amendment to the Russian budget for 2015: an attempt to maintain the status quo’ at http://www.osw.waw.pl/en/publikacje/analyses/2015-03-18/ amendment-to-russian-budget-2015-attempt-to-maintain-status-quo.

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This was sustainable as long as the terms of trade continued Fixed investment, meanwhile, was fractionally down in to improve. The population enjoyed a period of per capita 2013 and somewhat lower still, down by 2½ per cent, in real income growth of the order of 11 per cent a year. 2014. Real wage growth driven by productivity growth, driven in turn by investment, does not look to be on the Figure 2: The BRICs, 2005–17: two up and two down cards in the near term. (% of global output) What has hit Russian households is an acceleration of China India Russia Brazil inflation, despite moderately restrictive monetary policies, 20 as Figure 4 illustrates. 18 The CBR expects consumer price inflation to peak in the 16 second quarter of 2015 and then to moderate. January 14 2015 inflation was 15 per cent year on year; in February the 12 figure was 16.7 per cent and in March 16.9 per cent. The 10 immediate sources of extra inflation in late 2014 and early 8 2015 were the rapid decline in the rouble, by 41 per cent 6 % of world output against the dollar in the course of 2014, and the ‘counter- 4 sanction’ of an embargo on food imports from countries that 2 have imposed sanctions on Russia. Year-on-year inflation 0 in food prices in January 2015 was 20.7 per cent, and in 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 February 23.3 per cent.57

Note: The share calculations are based on GDP measured in dollars at purchasing power parity, not at official exchange rates. Figure 4: Consumer price index and broad money Source: IMF World Economic Outlook database of April 2015. supply (M2), January 2012–March 2015 (monthly data, % change from previous year) The 2014–15 crisis has thrown the growth of household consumption into reverse, as Figure 3 illustrates. This means M2 CPI that the expectations of the population at large, as well 25 as those of the leadership, are being challenged. The CBR projections in Figure 3 look comparatively optimistic, but 20 household consumption may nevertheless fare worse than GDP. The state appears to be suspending the indexation of 15 public-sector pay in the face of double-digit inflation. 10 Figure 3: GDP and household consumption in Russia, % year on 2005–17 (% p.a. changes) 5

GDP Household consumption 0 20

15 Jul 2012 Jul 2013 Jul 2014 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Sep 2012 Sep 2013 Sep 2014 Nov 2012 Nov 2013 Nov 2014 Mar 2012 Mar 2013 Mar 2014 Mar 2015 May 2012 May 2013 May 2014

10 Source: CBRhttp://cbr.ru/statistics/infl/Infl_01032015.pdf and http://cbr.ru/sta 5 tistics/?PrtId=ms&pid=dkfs&sid=dm.

% change p.a. 0 The fall in the rouble has, up to a point, helped the federal budget. Half of federal budget revenues come from dollar- -5 denominated inflows from exports of oil and gas. When a

-10 dollar buys more roubles, it also provides more roubles in these revenues. But the fall in oil prices in the latter part of 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 the year worked in the opposite direction. The upshot was a Sources: Rosstat; CBR projections of November 2014 for 2015–17. small federal budget deficit of 0.5 per cent of GDP.58 There is, however, a separate problem for the regional budgets.

57 Consumer price index and exchange rates from www.cbr.ru. 58 BOFIT Weekly, 30 January 2015.

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Regional administrations face (in aggregate) a modest Table 1 presents some key points from the 1 December deficit, created in part by their efforts to raise the pay of projections for 2015 from one official, one independent and state employees along the lines promised by President Putin one international forecaster. in May 2012. Individual regions face particular difficulties, from which they will be bailed out by soft loans from the Table 1: Selected projections of Russian economic federal budget. figures for 2015 based on assumed price of Urals crude The recent fall in investment has already been mentioned. a One influence on this has been the highest-ever net outflow Alfa-Bank CBR World Bank of private capital. In 2014 this totalled $154 billion, or close Average oil price, $/b 40 60 70 to 10 per cent of GDP if the latter is converted to dollars at GDP, % change year -3.8 -4.5 to -1.5 the end-year ballpark figure of R60=$1.59 on year -4.7 A net private capital outflow has been a feature of the post- communist Russian economy in every year except 2006 and Note: Based on different assumptions about the average annual price in 2015. 2007. When it is particularly large and accompanied by a a A later Alfa-Bank estimate (email from Natalya Orlova of Alfa-Bank of 17 dwindling current-account balance-of-payments surplus, December) estimates that in the first quarter of 2015 GDP could be down year on it threatens the comfortable balance-of-payments position year by 7–10%. When the January and February declines proved to be less than this, Alfa tweaked its GDP forecast for the year to an overall fall of only 2–3% that has been the norm for Putin’s Russia. Figure 5 depicts (Alfa-Bank ‘Macro Insights’, 19 March 2015). the recent situation. Sources: Alfa-Bank ‘Russian Economic Spotlight’ of 1 December 2014; CBR as reported by the US–Russia Business Council (USRBC) Daily Update of 16 Figure 5: Russia’s current-account balance and net flows December 2014; World Bank World Economic Outlook. of private capital, 2005–17 ($bn) The first two forecasts bear the scars of the collapse in oil Balance-of-payments current account Net private capital flows prices and in the currency during the weeks that preceded 150 their publication. Forecasts of these orders of magnitude continued to be generated into 2015. Even so, they may not 100 be durable. The volatility of both key numbers and forecasts 50 serves as a warning of what is the largest single problem for the Russian economy in the short term: an unusually 0 heightened degree of uncertainty. This is considered further

$bn p.a. -50 in the next section. -100 By the end of 2014 at least one thing was clear. The

-150 country faced a recession. An anti-crisis plan was being prepared, but agreement on it proved difficult. That, -200 along with the vacillations of the CBR – which raised its

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 key interest rate to 17 per cent to combat inflation and capital outflow, and then cut it back unexpectedly to 15 Note: The projections for 2015–17 are those contained in the CBR’s per cent and, from mid-March, to 14 per cent – diminished baseline scenario. the business community’s already low confidence in Source: CBR, http://www.cbr.ru/publ/ondkp/on_2015(2016-2017).pdf. policy-making. A degree of consumer hardship looks to be built into these forecasts: inflation is high and MinEkon envisages a clear fall in real wages. Whether this hardship The near future: 2015–16 produces anything more than widespread grumbling is another matter. On 27 November 2014 OPEC decided not to cut crude oil production quotas. Oil prices fell on the news, and so It is time to start looking at the problems that underlie the did the rouble. This was followed by a fall in forecasts Russian economy’s weak performance and, apparently, still for the Russian economy in 2015 as the imaginations of weaker prospects. the scenario-makers struggled to keep up with events.

59 ‘TsBR: Ottok kapitala iz Rossii v 2014 vyros v 2.5 raza’ [‘CBR: the capital outflow from Russia in 2014 rose by 2.5 times’], Vedomosti, 16 January 2015.

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Underlying problems Two fundamental concerns

The influences dragging down Russian economic The two structural problems are different in kind from the performance are of different kinds: structural, conjunctural others listed. The first is demographic: the decline in the and geopolitical. economically active workforce that is due to last for some time into the future. The ‘medium’ variant of Rosstat’s The structural problems limit the trend rate of growth of projections of working-age population (which incorporates potential output in the medium term – say, roughly, the an estimate of net migration) suggests it will diminish by next five years. They are: a little over 4 million between 2015 (84.1 million) and • The decline in the working-age population; and 2020 (80.0 million).60 The number of young entrants to the workforce is falling precipitously, and this is only partly • The ways in which the Putinist social and political offset by net immigration. The immigrant workers are order limits competition, efficient investment predominantly from other CIS countries and mostly low- and innovation. skilled. Their numbers may, moreover, prove to be lower The conjunctural problems are largely generated outside than official statisticians have anticipated. As the rouble has Russia, and are of uncertain duration. They tend to reduce tumbled, the attractions of working in Russia have declined. Russian economic activity levels below their (already Many Central Asian migrants are said to be heading for home. limited) potential. They are: Such demographic changes, raising the ratio of dependants • The end of quantitative easing in the United to workers, are not necessarily incompatible with strong States, pulling investment funds away from economic growth. If one source of growth, labour inputs, emerging markets; diminishes modestly, an increase in the growth rates of capital stock and of labour productivity can counteract that • The rapid rise of shale oil and gas production in influence on output. Unfortunately, since 2012 investment the United States and Canada, putting downward has been going down. That is for conjunctural reasons, pressure on world hydrocarbon prices; which will be considered below. But Russia’s rate of fixed • The weakness of the eurozone economies (Europe investment, at around 21 per cent of GDP, has long been as a whole takes about half of Russian exports) and modest for an ‘emerging’ economy. And a principal reason for some slowing of Chinese growth; that is to do with what might be called the Putinist system. and linked with these tendencies: As the rouble has tumbled, the attractions • The fall in the oil price; and of working in Russia have declined. Many • The fall in the exchange rate of the rouble against Central Asian migrants are said to be the euro and the US dollar (and practically all other heading for home. currencies except the Ukrainian hryvna). The geopolitical impediments to Russian economic There are different accounts of the economic workings growth are: of this system. One centres on Russian decision-makers’ alleged ‘addiction’ to the misappropriation of natural- • The fact that Russia is engaged in a war in Ukraine; resource rents, primarily from oil and gas, and in particular • The economic sanctions imposed on Russia as a result; their use of these rents to subsidize inefficient production units and their workforces inherited from Soviet times.61 • Russian counter-sanctions, notably the embargo on food imports from countries imposing sanctions; The Russian economy certainly exhibits a more extreme sensitivity to the oil price than those of other major oil and • The move, propelled by Western sanctions gas exporters. This showed up in the unusually large fall but acquiring a life of its own, towards import in Russian GDP in 2008–09 (7.8 per cent). It is currently substitution; and revealed in the exchange-rate fall against the dollar in the • An accompanying turn away from liberal economic year to February 2015: more than 40 per cent in the case of reform and in favour of the (often corrupt) organs of the rouble, against 19.5 per cent for the Norwegian krone law enforcement and security. and almost zero for the Saudi riyal, which comfortably

60 Rosstat demographic pages at http://www.gks.ru. 61 Clifford G. Gaddy and Barry W. Ickes, ‘Russia after the Global Financial Crisis’, Eurasian Geography and Economics, 51 (2010), No. 3, pp. 281–311, and Bear Traps on Russia’s Road to Modernization (London: Routledge, 2013). For a three-sector analysis see Richard Connolly, Troubled Times: Stagnation, Sanctions and the Prospects for Economic Reform in Russia, Chatham House Russia and Eurasia Programme Research Paper, February 2015.

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maintained its peg of SAR3.75=$1.62 It appears that GEM organizes surveys that ask representative samples confidence in the Russian economy is exceptionally of the population aged 18–64 such questions as whether sensitive, for an oil-exporting nation, to the price of oil. they own an established business (defined as one from which they have drawn an income for at least 42 months), The approach followed here is a more general one, and whether they have personally provided funding for close to the mainstream view of many Russian reformers:63 someone else to start a business and whether they own a that competition, investment, innovation and enterprise new business (defined as one from which they have been throughout the economy are heavily handicapped by a drawing income for between three and 42 months). weak rule of law, leaving most business people vulnerable to attacks by ‘the authorities’, often in collusion with The results indicate a rather low level of enterprise. Of better-connected business rivals. The exceptions are the 69 countries surveyed in 2012, Russia was 67th by the precisely those better-connected rivals: businesses that number of entrepreneurs per hundred respondents of the have special relations with powerful political cronies at working-age population.67 local, regional or national level (depending, broadly, Table 2 shows some 2013 GEM measures of entrepreneurial on the scale of the business). The authorities, in this activity for Russia and a few other countries. China is included connection, are the law-enforcement agencies, and they as a fellow emerging economy still under communist rule, the are commonly backed up by purchasable courts. This is US as a mature, high-income country, and Chile and South the phenomenon of asset-grabbing. It is common and is Korea as countries recently under authoritarian rule that have not confined to small business.64 begun to be considered democracies. Another ingredient of the system has the same roots: the capacity of the state to intervene directly in what would Table 2: Measures of entrepreneurial activity, Russia otherwise be everyday market activities. Inspectors of and selected countries, 2013 (% of population aged various public services, for example, collect bribes when 18–64 owning established or new businesses) supplying electricity connections, certifying workplace safety, or checking fire precautions and the like. Country Owning established business Owning new business In the absence of a strong rule of law and protection of Russia 3.4 2.8 property rights, incentives to invest and innovate are China 11 8.9 weakened. So is competition; the famous ‘level playing field’ US 7.5 3.7 is highly uneven. This state of affairs did not prevent growth Chile 8.5 9.6 when oil prices were rising, though it will have made it less S. Korea 9 4.2 than it could have been. As Boris Titov remarked, ‘When oil prices are falling, the protection of property becomes the Note: For definitions of ‘established’ and ‘new’ see the accompanying text. key question.’65 Source: GEM Key Indicators, http://www.gemconsortium.org/key-indicators. In short, when conjunctural and geopolitical factors The fundamental problem of corrupt state involvement are tending to depress economic activity, the limitations in the operations of business is part of a system in which imposed by the system are no longer covered up. And the informal networks and understandings carry more weight general sense that business is developed subject to the than formal rules, and the formal rules are themselves often will of the authorities (in alliance with well-connected inconsistent, so that it is difficult to conduct any organized incumbent companies) is likely to have a depressing activity without risk of prosecution, if the informal rules of effect on enterprise. the game permit prosecution. Described simply as ‘Sistema’ One way of testing this conjecture is to look at the by Alena Ledeneva,68 it has the consequence of making findings of Global Entrepreneurship Monitor (GEM).66 members of the political elite, even those conventionally

62 Exchange rates from www.xe.com. 63 For example, Sergei Aleksashenko, ‘Ekonomika Rossii k nachalu epokhi “posle Putina”’ [‘The Russian economy towards the beginning of the ‘post-Putin’ era’], Pro et Contra, Nos 3–4 (63) (2014), pp. 104–18. See also Alexei Kudrin and Evsey Gurvich, ‘A new growth model for the Russian economy’ (Helsinki: BOFIT Policy Brief No. 1, 2015), particularly at p. 29. 64 See Philip Hanson, Reiderstvo: Asset-Grabbing in Russia, Chatham House Russia and Eurasia Programme, Programme Paper 2014/03, March 2014. 65 Boris Titov, ‘Biznes pod “stat’ei”’ [‘Business under the “article” [of the criminal code]’], Vedomosti, 2 December 2014. Titov is the presidential ombudsman for business. While serving in that capacity, he seems to have preserved his previously demonstrated determination to campaign against asset-grabbing. 66 See its website at http://www.gemconsortium.org/. 67 O. R. Verkhovskaya and M. V. Dorokhina (2013), Natsional’niy otchet Global’niy monitoring predprinimatel’stva: Rossiya 2012, http://www.gemconsortium.org/docs/ download/3261, p. 56. 68 Alena Ledeneva, Can Russia Modernise? Sistema, Power Networks and Informal Governance (Cambridge University Press, 2013).

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tagged as liberals, captives of the rules of the game.69 There All economic activity is conducted under conditions of are powerful incentives for all members of the elite not to uncertainty. The immediate problem in Russia now is challenge those rules: they keep subordinates vulnerable to that uncertainty is unusually high: plausible scenarios selective use of the law, and therefore under control; at the are constantly being changed and, at any one time, same time they provide those subordinates with the means are widely dispersed over an unusually broad range of to acquire some of the illegal or semi-legal gains that the outcomes. This situation is exemplified by the CBR’s system allows; and their own past behaviour, since they guidelines for monetary and credit policy, published in ascended through the same system, would under a rule of November 2014.71 This text drastically revised a previous law be open to scrutiny. document published only two months earlier; it contained no fewer than five main scenarios; in addition, a sixth, It follows that the system would not easily be changed gloomier than the gloomiest of the five, was mentioned peacefully and from within, though peaceful change in the text as a ‘stress scenario’, based on oil at $60/b. cannot be ruled out entirely. One ray of hope is the Something close to this has subsequently become the growing readiness of business associations to stand up for CBR’s chosen view.72 fair treatment under the law.70 But the long-run prospects of successful pressure from an emerging class must be How much of a problem, however, is posed by the gloomier somewhat dimmed by the slow pace of development of scenarios? By mid-December 2014 (after the rouble had that class, illustrated in Table 2 above. The idea that a briefly fallen to 80 to the dollar), a decline of perhaps 4–5 growing middle class in general, and a growing business per cent in GDP from 2014 to 2015, followed by stagnation class in particular, will want and will press for improved or a small further drop, had become a mainstream view; civil rights, including the rule of law, is a familiar one. In this might be followed by a rebound in 2017 (see Figure Russia it comes up against a Catch-22: a weak rule of law 1 above). In February–March 2015, as the oil price and discourages many people from entering business, so the the rouble seemed to stabilize, the forecasters’ visions Russian business community grows slowly, weakening of the future lightened: MinEkon, for example, came up the growth of a constituency for the rule of law. with a baseline scenario of a 2.5 per cent fall in GDP in 2015, followed by a recovery to +2.8 per cent in 2016.73 It is for this reason that change in the Putinist system is In either case, its longer-run expectation would be for unlikely in the near term. Two questions follow about growth varying around the slow trend rate of about 2 the conjunctural and geopolitical burdens on the Russian per cent a year that was dictated by the limitations of economy: can the existing system cope with them in the ‘old growth model’.74 the sense of maintaining itself; and will they advance or retard the process of reform? Western sanctions, despite bravado to the contrary, are seen as part of the problem. The CBR’s main projections in November 2014 were differentiated according to what The conjunctural and geopolitical problems happened to the oil price and the duration of Western of the Russian economy sanctions (see Table 3). For each oil-price assumption there is a GDP projection that assumes sanctions are ended The common ingredient in the most immediate economic in the third quarter of 2015, and another GDP projection concerns of Russian policy-makers is uncertainty. There that assumes they are maintained until the end of 2017. is great uncertainty about the future oil price, the future The differences between the two are, by implication, the exchange rate of the rouble, the prospects of the war CBR projection of the effect of sanctions on the level of in Ukraine, the duration and future severity of Western economic activity. What evidence these were based on sanctions, and the likely scope and duration of a policy has not been divulged, and the oil-price projections now of state-led import substitution. (There is no uncertainty look highly optimistic, but at least the numbers offer a about the long-term outcome of such import substitution: clue to the bank’s thinking about the scale of the effects it won’t work; it may, however, provide a temporary boost of sanctions. to production levels.)

69 See Philip Hanson and Elizabeth Teague, Liberal Insiders and Economic Reform in Russia, Chatham House Russia and Eurasia Programme Paper 2013/01 (January 2013). 70 See Hanson, Asset-Grabbing, and Andrey Yakovlev, Anton Sobolev and Anton Kazun, ‘Mozhet li rossiiskii biznes ogranichit’ davlenie so storony gosudarstva?’ [‘Can Russian business limit pressure from the state?’], Moscow Higher School of Economics, preprint WPI/2014/01 (2014). 71 ‘Osnovnye napravleniya yedinoi gosudarstvennoi denezhno-kreditnoi politiki na 2015 god i period 2016 i 2017 godov’ [‘Main directions of the single state monetary and credit policy for 2015 and 2016–2017’], http://cbr.ru/today/publications_reports/on_2015(2016-2017).pdf. 72 US–Russia Business Council Daily Update, 16 December 2014. 73 Ibid., 26 March 2015. 74 Kudrin and Gurvich, ‘A new growth model’, p. 18.

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Table 3: CBR implicit estimates of the effects of of time, with corresponding effects on budget revenue, sanctions on Russian GDP, 2015–17 (% p.a.) and if sanctions remained in place for the medium term, those pressures would remain substantial. This was the 2015 2016 2017 main reason why Standard & Poor’s, one of three leading Oil at around $95/b -0.3 -0.6 -1.8 credit rating agencies, downgraded Russian sovereign Oil at around $84/b -0.3 -1.2 -1.9 debt from BBB- (investment grade) to BB+ (speculative or ‘junk’ grade) on 26 January 2015, and later downgraded Note: The figures for 2015 refer to an effect occurring only in the last quarter of Gazprom, Gazpromneft, Novatek, Rosneft, Transneft and the year, as described in the text. VTB similarly.80 Source: as in footnote 71. Nevertheless, the state’s financial reserves are substantial. Still, most projections do not envisage a steep and prolonged At the beginning of April 2015, the gold and foreign- fall in economic activity (more than 5 per cent annual falls exchange reserves stood at $356 billion. This was only a in GDP continuing for two years or more), with or without little less than the 2014 annual value of imports of goods continued sanctions. What of financial stability? and services ($429 billion). Included in the total were gold It is routinely and quite rightly observed that the Russian ($46 billion), the NWF ($53 billion) and the Reserve Fund state has considerable financial strength. For a start, its ($76 billion), designed primarily to support the budget 81 foreign debt is, by Western standards, laughably low. when the oil price is low. At 1 October 2014 the Russian state owed the outside world $64 billion.75 That is 3.3 per cent of what was until Figure 6: Russian foreign-exchange reserves on 1 April recently a $2 trillion GDP. Even with the rouble at 60 to 2015, by type of reserve ($bn) the US dollar rather than the 32 at which it started 2014, and dollar GDP correspondingly reduced, it is still only Gold around 6 per cent. The immediate debt problems lie elsewhere. Non-state debt, 46.3 including the debt of state-controlled banks and companies,76 has lately been on a much larger scale: $614 billion at 1 October 2014. The amount due for repayment by banks 77 and companies in 2015 is $108 billion. Sanctions have 75.7 Reserve Fund effectively closed off external finance for Russian business.78 Other 180.5 The pressure is on Russian banks and companies to find other sources of credit or to use a larger-than-usual share of their export earnings to repay debt. This has created even bigger queues than usual for state finance, including a Rosneft bid 52.9 for a soft loan that would be more than half the resources of the National Welfare Fund (NWF).79 The official purpose of NWF the NWF is to provide long-term back-up for pension funds; it now faces many other claimants, but only 60 per cent of it is supposed to be available for domestic projects. Note: Amounts add up to $355 billion, not $356 billion as mentioned above, because of rounding. In short, the pressure on public finances is considerable. Source: Heli Simola, ‘Russia’s international reserves and oil funds’, BOFIT Policy If the oil price were to stay below $60/b for some length Brief No. 4, 2015 (23 April 2015).

75 http://cbr.ru/statistics/print.aspx?file=credit_statistics/debt_an_new.htm. 76 In this chapter the word ‘companies’ is used to mean ‘non-bank corporations’. 77 http://cbr.ru/statistics/print.aspx?file=credit_statistics/debt_an_new.htm and BOFIT Weekly, 30 January 2015. 78 Not totally. Loans from parent companies to affiliates in Russia will mostly be re-financed. Some finance can be raised in Asia on a limited scale (the Tokyo market is closed to Russia). A minor segment of foreign loans is denominated in roubles. And there are occasional special cases like the $120 million syndicated loan to the Otkrytie company: Ol’ga Shestopal, Dmitrii Ladygin, ‘Zapad sdelal “Otkrytie’’’ [‘The West made a “Discovery”’], Kommersant’, 12 November 2014. But the overall effect is closure. 79 In November 2014 this was being resisted. Mikhail Serov and Margarita Papchenkova, ‘Rosneft’ perepishet zayavku v FNB’ [‘Rosneft will re-write its bid to the FNB’], Vedomosti, 13 November 2014. The bid was initially for R2.4 trillion, or around $50 billion, from a fund with total assets of about $82 billion. On 15 December 2014, in the middle of a financial storm, it was announced that Rosneft had issued bonds to the value of R625 billion to unidentified purchasers, on soft terms. See Vedomosti editorial, ‘Nadezhniy zayemshchik’ [‘A reliable borrower’], 15 December 2014. This spooked the market, making things worse. 80 USRBC Daily Update, 26 January 2015 and 4 February 2015. 81 Data from http://www.cbr.ru and http://minfin.ru/ru/perfomance/nationalwealthfund/statistics/.

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The most immediate source of risk, then, is bank and Other means of influence, and military power in particular, corporate debt to the outside world. But that in turn creates have high costs that are significant at a national level. Is the additional risks for the public finances. There have been enfeebled Russian economy capable of supporting them? headaches over redrafting the 2015 federal budget to cope It should be borne in mind that military strength, though with an oil-price assumption of $50/b instead of $100/b. most conspicuously exemplified by the United States, is not One draft produced a deficit equal to 3.8 per cent of GDP, the prerogative of rich nations. The Soviet Union, though requiring substantial drawing-down of the Reserve Fund. much poorer than the US and its allies and lagging behind The proposed cuts were resisted, but might not be enough.82 in technology, was able to maintain some sort of military In this situation, and particularly in the wake of the balance with them up to its demise. It did this, moreover, rapid rouble depreciation of late 2014, Russian banks have with very little help from its Warsaw Pact allies. So Russia got into difficulties. The CBR relaxed capital requirements in is not necessarily debarred by its moderate level of per December; there have been runs on some banks, a couple of capita GDP from pursuing what appear to be substantial bank bail-outs and plans for extensive bank recapitalization. military ambitions. A banking crisis at some point in 2015–16 cannot be ruled out.83 The weak state of the Russian It looks as though, in the short and medium term, market economy will at some stage set limits conjuncture and geopolitical conflicts could create serious to the scale and pace of the Russian problems for the Russian leadership. Default on external state armaments programme. Exactly debt is unlikely but recession and continued financial how the conflict over that programme turmoil are probable. The main question is how long the recession will last. A stabilization of the oil price around between (broadly) the economic bloc of $60/b, a slowing of inflation and some easing of Western the government and the military will be sanctions are all possible during the course of 2015. A resolved remains to be seen. combination of those developments would indicate an early exit from recession in 2016. But none of these events Pursuing them it certainly is. Military expenditure rose by is guaranteed. Confidence in Russia is fragile at the best of 20 per cent a year in the four years between 2011 and 2014. times, and these are not the best of times. That is in nominal terms, and it is likely that inflation in military hardware procurement is higher than in consumer prices. Even so, there has been a substantial increase in real Political implications for Russia’s Great terms, to over 3 per cent of GDP.84 Power ambitions Will the government be able to maintain such increases in military spending, and in the ambitious state armaments The present Russian leadership seeks to make Russia programme? First indications are that it will at any rate a dominant regional power (at least), able to bend its try. The original budget plan for 2015 envisaged a nominal neighbours to that leadership’s will. Keir Giles, in his increase in military spending of 33 per cent, moving the chapter, sets out the means by which it has pursued this total to 4 per cent of GDP.85 In early March 2015 the cuts aim. Some of these do not, in macroeconomic terms, (in the form of postponements) in military expenditure amount to a significant burden: cyber warfare, some forms favoured by the Ministry of Finance were still being resisted, of hostile messaging, purchasing the influence of individuals but a federal budget deficit of 5.2 per cent of GDP was and information warfare, for example. Others could in some a possible corollary.86 That would be extremely difficult cases entail significant costs but do not necessarily do so to finance and would erode what little confidence the in all instances: energy cut-offs, for example, may in the markets retain in Russian policy-making. medium term even help a Russian supplier to charge high prices after the cut-off, and the conversion of a neighbour’s The weak state of the Russian economy will at some debt to a stake in its infrastructure may also pay off in stage set limits to the scale and pace of the Russian state commercial terms, even if that was not its main purpose. armaments programme. Exactly how the conflict over that

82 Tat’yana Nedovina, ‘Byudzhet ne soshel’sya v raskhodakh’ [‘The budget didn’t match up on the spending side’], Kommersant’, 5 March 2015. 83 Oxford Analytica Daily Brief, ‘Russian financial system will be increasingly fragile’, 6 March 2015. 84 BOFIT Weekly, 6 March 2015. 85 Ibid., 10 October 2014. 86 Nedovina, ‘Byudzhet’. There had been some earlier compromises, however. See Ivan Safronov and Dmitrii Butrin, ‘Vozrazheniya vstupili v boi s vozrazheniyami’ [‘Objections went to war with objections’], Kommersant’, 19 February 2015.

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programme between (broadly) the economic bloc of the Sechin and one of his Rosneft vice-presidents, Mikhail government and the military will be resolved remains to Leontiev, have criticized Aleksei Kudrin, a former minister be seen. It does not follow that the leadership will give of finance and a personal friend of Putin, raising conspiracy up on its pursuit of regional hegemony and its stance of theories about whom he had been really working for.88 There antagonism towards the West. is evidence that in mid-2014 President Putin’s inner circle of advisers had narrowed and was becoming largely confined to security and defence officials.89 The subsequent steep fall in Conclusions the oil price and the rouble brought more meetings involving the president and senior economic officials, but it is not clear The built-in resistance of the Russian policy and business whether those officials have regained their former influence elite to radical reform of the Putinist system makes any on decisions. The prolonged and contentious process of change in the underlying operation of that system unlikely budget revision, mentioned above, suggests that economic in the medium term, short of a regime change. The chances policy-making is in disarray. of a smooth and peaceful regime change are low. If some What do Russia’s uncertain economic prospects tell us about stable and lasting compromise were reached over Ukraine, sanctions? By themselves, the sanctions in place at the time if sanctions and counter-sanctions were withdrawn, and if of writing are unlikely to provoke such economic distress uncertainties over the oil price and the rouble were eased, as to generate pressure for radical change. On the contrary, the binding constraints on Russian economic performance they provide the Russian leadership with a handy scapegoat would once more be those of demography and system. The for stagflation: the West. It has been argued that they also trend rate of growth of Russian GDP might then be of the strengthen the forces of nationalism and statism arrayed order of 2–2½ per cent a year.87 This might not satisfy the in Russia against thoroughgoing market reforms.90 Even if, leaders’ ambition for the Russian share of global output to as seems probable, nationalism and statism were gaining increase. It might even raise doubts about Russia’s plans to ground in Russian policy-making before 2014, this is a upgrade its military capabilities. Still, it ought to be liveable. serious unintended consequence of Western sanctions. If those conditions are not fulfilled, and conjunctural and The arguments for and against the sanctions so far imposed geopolitical uncertainty remains high, the Putinist system on Russia, however, are not exclusively or even primarily to will come under more pressure. One particular pressure do with economic consequences. Sanctions send messages. point would be the leadership’s ambitious plans for military Reducing sanctions while the situation in Ukraine remains upgrading. These plans are expensive, and the conflict unchanged would send its own message: the West is of priorities between military ambitions and the public giving up; you will get away with more adventures. In any finances could be acute. case, a test now faces the West that is even harder than Meanwhile relations within the political elite are visibly maintaining sanctions: propping up the almost bankrupt strained, and the visibility is unusual. For example, Igor Ukrainian economy.

87 These are not numbers plucked at random. The figure of 2½ per cent is about the level of the ‘low’ prospect (of three) calculated for 2011–20 by Revold Entov and Oleg Lugovoy in ‘Growth Trends in Russia since 1998’, in Michael Alexeev and Shlomo Weber (eds), The Oxford Handbook of the Russian Economy (Oxford University Press, 2013), pp. 132–61. Kudrin and Gurvich, in ‘A new model’, suggest the figure is probably less than 2 per cent a year. 88 See https://www.youtube.com/watch?v=Cw8ll-3_Kx0 for Sechin’s remarks and http://www.gazeta.ru/business/2014/12/17/6350425.shtml for Leontiev. 89 Konstantin Gaaze, ‘Poker dlya odnogo’ [‘Poker for one’], New Times, 1 September 2014. 90 Connolly, Troubled Times.

22 | Chatham House 4. A War of Narratives and Arms James Sherr

Introduction: a war of perception activity in peacetime as well as in war.94 Both the term and the practice derive from the USSR’s intensive investment In February 2014, the legal order and security system in ‘ideological struggle’, ‘active measures’ and ‘reflexive of post-Cold War Europe collapsed. In retrospect, all control’, all of them designed to influence opponents, such breakdowns acquire an aura of inevitability. But disorientate them and undermine their effectiveness. As their immediate causes are unforeseen and, in the eyes Keir Giles has observed elsewhere, these practices once of those with reputations to salvage, ‘unforeseeable’. In again constitute ‘a wide-ranging, holistic area of offensive these two respects, February 2014 resembles August 1914. activity by the [Russian] state’.95 There is a third resemblance: the belief that economic In the peculiarly Russian sense of the term, ‘information interdependence makes such collapses impossible. struggle’ is a defensive measure, the product of a belated But the West is not at war with Russia and, in contrast but intensive and long-term effort to ‘catch up and overtake’ to 1914, no war fever exists. Chancellor Angela Merkel opponents who have used advanced communications, soft speaks for the majority of European leaders when she says power ‘instruments’ and civic mobilization against target that ‘there is no military solution’ to the crisis. In Poland states as early as NATO’s Kosovo intervention in 1999. The and the Baltic states Ukraine’s independence is seen as publication of an ‘Information Security Doctrine of the existentially linked to their own. But to many others in the Russian Federation’ in September 2000 testifies to the depth West, its ‘pivotal’ role is a dubious abstraction, and Ukraine of interest accorded to these issues over a 15-year period. itself is seen as a lost cause. Although Vladimir Putin’s According to the Ministry of Defence’s 2011 ‘Conceptual image was falling ‘precipitously’ in Germany well before Views’ of the information space, even the narrower concept Crimea’s annexation, his stock is notably higher in Hungary of ‘information war’ (voyna) encompasses the ‘undermining and Greece as well as within anti-establishment parties [of] the political, economic and social system, and massive in France and the United Kingdom.91 In more mainstream indoctrination of the population for destabilizing the society ‘realist’ circles, there is a strong residual view that the and the state, and also forcing the state to make decisions in post-1991 security order can be repaired, or reformatted, the interests of the opposing party’.96 to ensure that a principal pillar of the antebellum system, ‘Undermining’ is not the same as persuading. A prime 92 partnership with Russia, is restored. purpose of Russian information campaigns is to sow doubt The Russian state is not a disinterested observer in these in post-modern societies already distrustful of ‘certainty’. debates. Many of its current custodians, seasoned ‘special Such campaigns also have a habit of deluding those service’ professionals, have brought Leninist traditions of who devise them. Excluding the information dimension ‘ideological struggle’ into the post-modern world. As Keir of Russian policy might simplify things, but it does not Giles demonstrates in Chapter 6, Russian investment in advance understanding of a conflict that will be decided by the ‘toolkit’ of perception management is unprecedented.93 intellectual and psychological factors as well as material Yet this has come as a surprise to many in Europe. In the ones. The conflict in Ukraine is a war of narratives as age of the web and social networks, as in the age of radio well as arms. and television, the West has led the way in information For all this, ‘the state is not pure spirit’, as Trotsky technology and its commercial application. But such reminded us, and politics and war are not purely subjective discoveries are not patentable. Nor do they confer a phenomena.97 They create facts, which can be a harsh genetic mastery of the political applications of information auditor of the performance of those who claim to be acting technology, let alone the methodology of what the Russian in the national interest. The analysis that follows is an state calls ‘information struggle’. attempt to interpose fact into a conflict where, seemingly, The word ‘struggle’ (bor’ba) is not a Russian euphemism for ‘nothing is true and everything is possible’.98 war, but a professional insider’s term denoting adversarial

91 Hannes Adomeit, ‘Collapse of Russia’s Image in Germany: Who is to Blame?’ Eurasia Outlook, Carnegie Moscow Center, 18 February 2014, http://carnegie.ru/ eurasiaoutlook/?fa=54540; Nigel Farage, ‘I admire Vladimir Putin’, the Guardian, 31 March 2015, http://www.theguardian.com/politics/2014/mar/31/farage-i-admire-putin. 92 John J. Mearsheimer, ‘Why the Ukraine Crisis is the West’s Fault’, Foreign Affairs, September–October 2014, https://www.foreignaffairs.com/articles/russia- fsu/2014-08-18/why-ukraine-crisis-west-s-fault. 93 See pp. 45, 46–48 of this report. 94 The Russian terms are informatsionnaya bor’ba and informatsionnoe protivostoyaniye. 95 Keir Giles, ‘With Russia and Ukraine, is all really quiet on the cyber front?’, ARS Technica, 11 March 2014, http://arstechnica.com/tech-policy/2014/03/with-russia- and-ukraine-is-all-really-quiet-on-the-cyber-front/. 96 ‘Conceptual Views Regarding the Activities of the Armed Forces of the Russian Federation in the Information Space’ [Kontseptual’nye vzglyady na deyatel’nost’ Vooruzhennykh Sil Rossiyskoy Federatsii v informatsionnom prostranstve], RF Ministry of Defence, 2011. 97 Lev Trotsky, The Revolution Betrayed, Chapter 11, https://www.marxists.org/archive/trotsky/1936/revbet/ch11.htm. 98 A view prevalent in Russia itself. Peter Pomerantsev, Nothing is True and Everything is Possible: Adventures in Modern Russia (London: Faber & Faber, 2015).

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Ukraine divided: between Russia, the West blessed with benign geopolitical environments. No powerful and itself neighbours have an interest in their enfeeblement, let alone dismemberment. The pertinent questions are whether However the conflict in Ukraine evolves or ends, its Ukraine’s divisions are the cause of the armed conflict that implications will be significant for the West, and not only broke out after President Viktor Yanukovych left office and its immediate protagonists. Ukraine’s failure to realize its whether the conflict has diminished or exacerbated them. core objectives – the restoration of its territorial integrity It has been argued that the war is a ‘battle over Ukrainian 99 and control of its borders – will have repercussions identity’. Yet this raises two questions: who decided to throughout the NATO treaty area: less so if that failure is wage war over it, and who enabled them to wage it? Recent confined to Crimea, more so if ‘frozen conflict’ becomes the history does not support the view that the war in Ukraine is ‘new normal’ in eastern Donetsk and Luhansk. As events a civil war, and only 20 per cent of Ukrainians believe that 100 in Moldova and the South Caucasus have shown, ‘frozen it is. The view of the Ukrainian majority is supported by conflict’ is a misnomer for a frozen process of conflict evidence as much as by sentiment: resolution. Such conflicts not only poison the body politic; • Between 1992 and 2014, it was the absence of they mutate into fresh conflicts, sporadic or decisive. The conflict across ethnic, confessional and linguistic potential of escalation is not only a theme of Russian info- lines that was noted by the UN, OSCE and PACE (the war; it is a very real prospect. Yet even if these dangers can Parliamentary Assembly of the Council of Europe), be averted, Ukraine will confront problems equal to those it latterly reaffirmed by the UN Special Rapporteur faces at present. It will inherit a humanitarian catastrophe. on Minority Issues in January 2015.101 Between the Macroeconomic stability and energy security will remain signing of the Russia–Ukraine State Treaty (31 May precarious. For the better part of 20 years, the country 1997) and Yanukovych’s fall from power (22 February has been irresponsibly governed, and it is far from certain 2014), Russia brought no official complaint against that EU- and IMF-mandated reform will extirpate the Ukraine regarding its respect for minority rights.102 instincts of a bloated and avaricious state. These burdens are subjecting an already exhausted country to tests it has • Ukraine’s proverbial ‘balancing act’ between Russia not experienced before. and the West is overstated. Under all four of its presidents, Ukraine defined itself as a European state. EU membership has never been a highly contentious The pertinent questions are whether issue.103 It is NATO membership that has polarized Ukraine’s divisions are the cause of the armed society, particularly after the 1999 Kosovo conflict conflict that broke out after President Viktor and 2003 Iraq war (wrongly perceived as a NATO-led Yanukovych left office and whether the operation), though support for joining NATO is now 104 conflict has diminished or exacerbated them. at unprecedented levels. Leonid Kuchma, who won the 1994 election as the ‘candidate of the east’, not only devised a ‘multi-vector’ policy but a ‘distinctive Bad governance is not a casus belli. Yet the perception of partnership’ with NATO that was treated as a blueprint Ukraine as a ‘divided country’, a ‘failed state’ and, pace for de facto integration. Yanukovych, architect of the Putin, an ‘artificial state’ has shaped public attitudes about non-bloc policy, pursued an Association Agreement the conflict and Russia’s role in it. How many countries with the EU and resisted Ukraine’s incorporation are not divided? Four of the most prosperous countries in into the Eurasian Customs Union, which he believed the EU – the UK, Belgium, Italy and Spain – are hosts to (correctly) would sound the death knell for separatist movements. In contrast to Ukraine, all of them are his presidency.

99 For example, Nicolai Petro, ‘The Real War in Ukraine: The Battle Over Ukrainian Identity’, the National Interest, 10 January 2015; ‘Save Ukraine!’, Moscow Times, 19 March 2014 (in which he endorses Moscow’s claim that ‘97 percent of Crimeans … no longer feel comfortable within Ukraine’). 100 Razumkov Centre, September 2014, www.uceps.org/upload/1412757450_file.pdf. 101 ‘The overwhelming majority of the minority and other representatives consulted by the Special Rapporteur on minority issues during her visit to Ukraine described a history of harmonious inter-ethnic and interfaith relations and a legislative, policy and social environment that was generally conducive to the protection of their rights, including cultural and linguistic rights.’ Report of the Special Rapporteur on Minority Issues: Mission to Ukraine (Human Rights Council, Agenda Item 3), 27 January 2015. 102 The treaty, which obliges the parties to ‘respect the territorial integrity and … inviolability of borders between them’, contains general and specific provisions regarding minority rights (Articles 3 and 12). Treaty of Friendship, Cooperation and Partnership between Ukraine and the Russian Federation, 31 May 1997. 103 According to a survey of the Kucheriv Democratic Initiatives Foundation in January 2015, only 19.9% of respondents nationwide held the view that European integration ‘divided Ukrainian society’. At the same time, 29.7% supported membership of the Eurasian Economic Union, which implies (as other polls do) that a proportion of citizens favours membership of both. http://dif.org.ua/ua/publications/press-relizy/sho-obednue-ta-rozednue-ukrainciv.htm; http://dif.org.ua/ua/ publications/press-relizy/krim-ne-opituvannnja-.htm. 104 The Kucheriv Foundation poll places it at 40%, as opposed to 22.4% who favour a non-bloc policy and only 10.1% who support membership of the Collective Security Treaty Organization (CSTO).

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Box 1: Ukraine crisis – timeline

2013 2 May Clashes in the Black Sea city of Odessa leave 42 21 November President Viktor Yanukovych abandons the people dead, most of them pro-Russian activists. Association Agreement with the EU, seeking 5 May–1 July Ukraine Ministry of Defence and National closer ties with Russia. Small protests start. Guard units gradually regain control of 23 out 30 November– Riot police brutally disburse student protesters of 36 districts seized by the rebels. 1 December at night. Protests escalate, with over 800,000 11 May The Donetsk and Luhansk ‘People’s Republics’ people demonstrating in Kyiv – a movement declare independence after referendums. that comes to be known as the ‘Euromaidan’ 25 May Petro Poroshenko is elected president of or just the ‘Maidan’. Significant protests also Ukraine on the first ballot. occur in other cities in Ukraine. 27 June The EU and Ukraine sign the full Association 17 December Vladimir Putin agrees to buy $15 billion Agreement (having signed the political of Ukrainian debt and reduce the price of chapters on 21 March). Russian gas supplies by a third. 17 July Malaysia Airlines Flight MH17 is shot down in 2014 eastern Ukraine, allegedly by pro-Russian rebels. 16–23 January Parliament passes restrictive anti-protest laws 31 July The EU and US announce more stringent as clashes turn deadly. (Tier 3) economic sanctions, restricting access 20 February At least 88 people reportedly die in 48 hours by Russian banks to finance and by Russian oil as protesters and police clash in Kyiv. companies to long-term Western financing, ‘dual use’ and advanced technology. 21 February President Yanukovych signs EU-brokered compromise deal with opposition leaders. 22 August A Russian ‘humanitarian convoy’ arrives at the besieged city of Luhansk without 22 February President Yanukovych flees Kyiv. Parliament Ukrainian permission. votes to remove president from power, elects Oleksandr Turchynov acting president and 28 August Rebel forces reinforced by Russian regulars sets elections for 25 May. launch a major offensive towards the strategic port of Mariupol. 23 February Parliament annuls Yanukovych’s August 2012 law allowing oblasts (regions) to adopt 5 September The rebels, Ukraine, Russia and the OSCE sign Russian as their ‘official’ language. Vetoed by a ceasefire and political framework agreement Turchynov. in Minsk. 27–28 February Pro-Russian gunmen seize government 31 October Russia agrees to resume gas supplies to Ukraine buildings in Simferopol. over the winter in a deal brokered by the EU. 1 March Russia’s parliament approves President Putin’s 2015 request to use force in Ukraine to protect 19 January Rebel and Russian forces launch a military Russian interests. offensive, backed by heavy weapons; rebels 16 March In Crimea 97 per cent of people are said to retake Donetsk airport on 22 January after have voted to join Russia in a referendum four months of fighting. condemned as a sham in the West. 31 January Talks of the Trilateral Contact Group 17 March The EU and US impose travel bans and asset (Ukraine, Russia, OSCE) in Minsk collapse freezes on several officials from Russia and when rebel leaders decline to attend. Ukraine over the Crimea referendum. 12 February Under the auspices of Ukraine, Russia, Germany 18 March Putin signs a law incorporating Crimea into and France, representatives of the Trilateral Russia. Contact Group and rebel leaders sign a second 7 April Protesters seize government buildings in ceasefire and political accord in Minsk. Kharkiv, Donetsk and Luhansk in eastern 18 February Ukrainian forces routed from Debaltsevo three Ukraine. days after ceasefire was to have taken effect. 16 April Ukraine announces the start of an ‘anti- May Military activity in the conflict zone terrorist operation’ against rebel forces. intensifies.

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• Despite deep dissatisfaction with the quality of their ‘official’ language.109 The rash (and hastily governance, there has been relatively little discord rescinded) annulment of this law by the Verkhovna over Ukrainian statehood or borders. Eastern Rada (parliament) on 23 February 2014 deepened Ukrainians have been estranged from Kyiv, whoever perceptions in russophone communities, saturated by has held office. Yanukovych was elected by 75–80 Russian media, that Yanukovych had been deposed per cent of the region’s voters in February 2010, but by radical nationalists. In Ukraine the proportion his support steadily declined, and by February 2013, of Russian-language schools is greater than the 42.6 per cent did not support him at all.105 Following proportion of ethnic Russians in the country, but the victory of the Maidan protesters, dissatisfaction lower than the proportion of Russian speakers.110 with Kyiv in the east rose to 67 per cent; nevertheless, In occupied zones, Ukrainian-language schools have Pew recorded only 27 per cent support for secession been shut down, and in Russia, where some 2 million in eastern oblasts in May 2014, and Gallup’s figures Ukrainians reside, there are none at all. were decidedly lower.106 Fewer than 20 per cent of This record accords poorly with the motifs of Kremlin Ukrainians as a whole viewed the Maidan as an action discourse. Ukrainians and Russians are not ‘one people’ with instigated by radical nationalists or foreign powers. a ‘common history’, but related peoples whose intersecting The few large pro-regime protests against the Maidan histories have bred intimacy, ambivalence and conflict. were organized by the authorities and were brief in The traditions of what Dmitry Furman called the ‘Cossack duration; participants in Kyiv’s ‘anti-Maidan’ were anarcho-democratic semi-state’ are clearly visible in the paid a daily allowance and marshalled in and out.107 two Maidans, the country’s ethno-religious diversity, its In Crimea (whose population is only 58 per cent civic literacy and the widespread distrust of power.111 Russian), support for joining Russia did not exceed Ukrainians have no difficulty distinguishing between 42 per cent in 2013. According to Pew’s survey one linguistic and state identity or between ethnic origin and month after annexation, it had risen to 54 per cent, ‘belonging’ (nalezhnist’). The ‘identity war’ thesis ignores but that was still a far cry from the 97 per cent who the factors that bind Ukraine together.112 It also sidesteps supposedly voted for annexation in the Russian- what by March 2014 had become apparent: Russia’s sponsored referendum.108 instrumental role in the conflict. • The language issue, which has risen and fallen in Like the USSR before it, the Russian Federation has saliency since 1992, defies simple categorization. invested in a model of warfare designed to cripple a Its potential divisiveness was defused by Ukraine’s country before the start of overt conflict.113 With and constitution of 1996, which establishes Ukrainian without Russian help, Yanukovych had hollowed out as the ‘state’ language, but also guarantees ‘the free much of the state. For years the president had enabled development, use and protection of Russian and Russian loyalists, agents and money to penetrate Ukraine’s other languages’ (Article 10). By raising Ukrainian military, security service and police. By December 2013 language requirements in university education, the Ukrainian Security Service (SBU) found itself under Viktor Yushchenko’s government contravened the de facto Russian subordination. So severely was the SBU spirit of these provisions, inadvertently garnering compromised that during the final days of Yanukovych’s support for the law of 8 August 2012, which enabled rule Russian-directed operatives were able to erase codes, eastern and southern oblasts to adopt Russian as

105 ‘Do You Support the Activity of Victor Yanukovych?’, Razumkov Centre (Kyiv), April 2014. 106 These were 5–8% for the right of oblasts to secede, 35% for a federal state, 49% for a unitary state – International Republican Institute, Public Opinion Survey: Residents of Ukraine, 3–12 April 2014, www.iri.org/sites/default/files/2014%20April%2024%20Survey%20of%20Residents%20of%20Ukraine,%20April%20 3-12,%202014.pdf; Pew Research Center, Chapter 1. Ukraine: Desire for Unity Amid Worries about Political Leadership, Ethnic Conflict, 8 May 2014, www.pewglobal. org/2014/05/08/chapter-1-ukraine-desire-for-unity-amid-worries-about-political-leadership-ethnic-conflict/. 107 The author observed this himself in December 2013. In the Kucheriv poll, only 8.3% of respondents characterized the Euromaidan as a ‘fight by radical and nationalist groups against a lawful authority’ and 11.5% saw it as a ‘conflict by foreign powers on Ukrainian territory’. (More than one response was permitted.) 108 See Pew Research Center, Chapter 1. 109 According to an April 2014 Pew poll, 73% of eastern (as opposed to 30% of western) Ukrainians want Russian established as a second official language. But even in eastern Ukraine only 1% would like to see Russian established as the sole official language of the country. 110 In the most recent census (2001), 17.9% identified themselves as ethnic Russians and 29% as Russian-speaking. 111 Dmitry Furman, ‘Kuchma has got the wrong people’ [Kuchme dostalsya ne tot narod], Vremya MN [The ‘Times’ of Moscow News], 15 October 2002. 112 For a discussion of these factors, see James Sherr, ‘Ukraine’s Scissors: Between Internal Weakness and External Dependence’ (Russie.Nei.visions no 9, IFRI March 2006) and ‘Whither the Russian Factor?’, in Andrej Lushnycky and Mikola Riabchuk (eds), Ukraine on its Meandering Path between East and West (Bern: Peter Lang, 2009). 113 For a wider discussion see ‘Towards the Next Security and Defence Review: Part Two – NATO’ (Third Report of Session 2014–15), House of Commons Defence Committee, 22 July 2014, p. 17 (hereafter HCDC).

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undermine the integrity of communications systems and Hybrid wars are also prosecuted by ‘masking’ and make- destroy records.114 Thus, when Igor Girkin (alias Strelkov), believe.118 The Russian ‘humanitarian convoys’ organized the first defence minister of the so-called Donetsk People’s in summer 2014 first appeared in the 1999 Kosovo conflict Republic (DPR), states that ‘if our detachment hadn’t under the banner of the Ministry of Emergency Situations, crossed the border, everything in short [i.e. the resistance] then headed by the current minister of defence, Sergey would have collapsed’, he possibly inflates his own Shoygu. The maskirovka [disguise] was exposed when the importance.115 The state confronting him had effectively first convoy, stopped on the Ukraine–Romania border, was suffered a stroke. found to contain military and dual-purpose equipment. At least one of the convoys inspected by the OSCE in 2014 The direct intervention of Russian regular contained empty vehicles that then proceeded to remove forces in August, and the loss of nearly 1,000 industrial machinery from occupied areas, arguably offsetting the value of the humanitarian goods brought into them.119 Ukrainian troops in Ilovaysk, were a brutal reminder that Ukraine is not fighting an In May 2014 (two months before his own dismissal), internal war. Girkin lamented that the people of Donetsk were not supporting him: Among the initial leaders of the insurgency in eastern I admit that I never expected that in the entire oblast, one Ukraine, only one, Pavel Gubarev, is a Ukrainian citizen. cannot find even a thousand men ready to risk their lives even Girkin, a former FSB (Federal Security Service) colonel for their own city. … Amongst the volunteers, the majority are men over 40 who acquired their upbringing in the USSR. But with combat experience in Chechnya, was first deployed where are they, the young, healthy lads? Perhaps in the brigades in Crimea and, at the conclusion of that operation, crossed of gangsters who, enjoying the absence of authority, have into Donetsk along with several hundred other ‘tourists’ thrown themselves into plunder and pillage in all cities and from Russia. The conflict he claims to have started is the right across the oblast.120 linear descendant of irregular wars fought on the fringes of By then, the separatists had lost the impact of surprise, and the Tsarist and Soviet empires. These were untidy, covert Ukraine had recovered its bearings. The Ukrainian counter- and vicious wars, prosecuted as much by informal militias offensive between May and July, which regained control and networks as by conventional armies. They blurred the of 23 of the 36 districts seized by the rebels, demonstrated distinction between internal and interstate conflict, and support for the state and foreclosed military collapse. Yet they were designed to do just that. Combatants in today’s it also induced the Kremlin to raise its game. The direct ‘hybrid war’ are, accordingly, a motley assortment of intervention of Russian regular forces in August, and the loss serving officers in the FSB and GRU (military intelligence), of nearly 1,000 Ukrainian troops in Ilovaysk, were a brutal remnants of Ukraine’s former Berkut ‘special’ police, the reminder that Ukraine is not fighting an internal war.121 private security forces of oligarchs, Cossacks, Chechen Reconstitution of Ukraine’s offensive capacity in the ensuing fighters, adventurers and criminals. In the words of months provoked a still more dramatic Russian escalation a militia officer in October 2014, ‘mostly we have nut on 19 January 2015, which brought onto the field not only jobs’.116 Finance in this ‘network war’ is as opaque as it fresh forces but munitions, weapons systems and electronic is in Russia’s ‘network state’.117 warfare capabilities that were entirely new to the conflict.

114 Taras Kuzio, ‘Yanukovych Authorizes the Return of Russia’s FSB to the Crimea’, 24 May 2010, http://www.moldova.org/yanukovych-authorizes-the-return-of- russias-fsb-to-the-crimea-209210-eng/. On Russia’s role in 2013–14, the author consulted senior security officials in March 2014. See also ‘Diplomatic Journal: Pavel Felgenhauer on the Defence of Russia’s Perimeter’, 22 March 2015, http://rus.delfi.ee/daily/diplomaatia/zhurnal-diplomatiya-pavel-felgengauer-o-zaschite-perimetra- rossii?id=71061427; and Poroshenko, 26 March 2015, http://korrespondent.net/ukraine/3496170-poroshenko-ranshe-sbu-na-80-sostoiala-yz-ahentov-fsb. 115 ‘Strelkov Said that It Was He Who Began the War in Ukraine’ [Strelkov soobshchil, chto eto on nachal voynu na Ukraine], BBC Russian Service, 20 November 2014. 116 Cited in Eastern Ukraine: A Dangerous Winter, International Crisis Group, Europe Report No. 235, 18 December 2014, p. 13. 117 On what is also termed ‘ambiguous’ and ‘network’ war, see Roger McDermott, ‘Russia’s Information-Centric Warfare Strategy: Redefining the Battlespace’, Eurasia Daily Monitor, Vol. 11, issue 123, 8 July 2014 (Washington, DC: Jamestown Foundation); and for a somewhat different view, see Keir Giles, HCDC, p. 46, Q154–195. On Putin’s ‘network state’ see Vadim Kononenko and Arkady Moshes, Russia as a Network State: What Works in Russia When State Institutions Do Not (London: Palgrave, 2011). 118 The term maskirovka describes technical and tactical measures designed to make arms and actions appear to be different from what they are. 119 ‘Lugansk Factory Transports Equipment to Russia and Starts Production There’, http://finance.bigmir.net/news/companies/50185-Luganskij-zavod-vyvez- oborudovanie-v-Rossiju-i-zapuskaet-tam-proizvodstvo---SMI, 27 August 2014, and

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These offensives represent an escalation of information war as well as war-fighting. The January offensive Box 2: Minsk II terms demonstrated the pitiful irrelevance of the 5 September 1. Immediate and full bilateral ceasefire in specific Minsk accords, (which mandate the complete withdrawal (otdel’niye) areas of Donetsk and Luhansk with effect from of foreign forces from the country); nevertheless, the 15 February. response was not the much mooted arming of Ukraine, but a second Minsk accord that was sabotaged from 2. Withdrawal of all heavy weapons (by 50–75 km) by both the moment it came into effect. Whereas the débâcle of sides (N.B. on land). Ilovaysk preceded the September ceasefire, the débâcle of 3. Effective monitoring and verification regime for the Debaltsevo followed the ceasefire that was to have come ceasefire and withdrawal of heavy weapons by the into force on 15 February. Not only does the Kremlin seek Organization for Security and Co-operation in Europe to show that the West’s policy of sanctions is not working; (OSCE). it is equally determined to show that it alone holds the key to resolving this conflict. The purpose of Russia’s 4. Launch of dialogue, from day one of the withdrawal, on military card is to deny Ukraine the baseline it requires holding of local elections and the ‘future regime’ in these for political sustainability, fiscal solvency and structural territories. reform. If Minsk II stabilizes the situation, Russia will 5. Pardon or amnesty for any figures involved in the Donetsk create the conditions for ‘Minsk III’. This logic, which has and Luhansk conflict. never wavered since Yanukovych’s departure, puts the spotlight squarely on Ukraine’s state capacity, military 6. Release of all hostages and other illegally detained and economic, as well as the West’s resolve to sustain a persons. course that not everyone regards with enthusiasm. 7. Unimpeded delivery of humanitarian aid to the needy, Over a year after Yanukovych hastily left Kyiv, Ukraine is internationally supervised. no longer the country that it was. It is substantially more 8. Definition of modalities for restoring full social and consolidated and vastly more imperilled. Vladimir Putin economic links with affected areas, including Ukrainian has done more than any leader, Russian or Ukrainian, to government disbursement of ‘social transfers’. forge a broadly based Ukrainian national identity that is neither aggressive nor extreme. Despite their visibility on 9. Restoration of Ukrainian government control over the the Maidan, the far-right parties were reduced to a rump state border, throughout the conflict zone, following of under 2 per cent in the presidential election of 25 May constitutional reform and subject to the concurrence 2014 and the parliamentary elections of 26 October.122 For of separatist leaders. their part, the anti-Maidan candidates secured only 11 10. Withdrawal of all foreign armed groups, military per cent of the vote in the latter. Although the exclusion ‘equipment’ (tekhniki) and mercenaries from Ukrainian of Crimea and over 80 per cent of constituencies in territory. Donetsk and Luhansk by force majeure inevitably skewed these results, the fact is that in the presidential election, 11. Adoption of a new constitution by the end of 2015, despite 21 candidates in the field, Petro Poroshenko with special provisions for specific areas agreed with their received a plurality in all eastern oblasts (including the representatives. Donetsk and Luhansk districts where voting took place) and avoided a second round by winning a national The war has also given prominence to the parallel civic majority of 54.7 per cent.123 Set against this, however, the state, a phenomenon first noted by the author in 2002.125 Its low turnout in oblasts that voted for Yanukovych in 2010 ethos, summed up in the slogan ‘we rely upon ourselves’, is testifies to the disaffection that remains in much of the symbolized by the Maidan and the cottage industries that east and south.124

122 Oleh Tyahnybok, candidate of Svoboda, the main party of the right, secured 1.16% and Dmytro Yarosh of the far-right Praviy Sektor 0.71%. Nevertheless, Oleh Lyashko, leader of the populist Radical Party, came third at 8.1%. ‘Ukraine: Early Presidential Election 25 May 2014’, OSCE/ODIHR, p. 34. On 26 October, Svoboda secured six seats in the 426-member national parliament and Praviy Sektor one. 123 He received 35% of the vote in Kharkiv, 38.7% in Zaporizhye and 44.2% in Dnipropetrovsk. 124 Sergiy Kudelia, ‘Ukraine’s 2014 Election Result is Unlikely to be Repeated’, Washington Post, 2 June 2014. 125 James Sherr, ‘Ukraine’s Parliamentary Elections: The Limits of Manipulation’, Occasional Paper 91, Conflict Studies Research Centre, Camberley, 21 April 2002.

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sprang up around it. Its most visible wartime manifestation penurious circumstances and by lawful means in a country has been the formation of all-volunteer territorial defence where power and privilege are scorned. This is both a battalions, currently 37 in number, more than a quarter of constraint and an opportunity. So is public recognition that them from eastern oblasts. This helps to explain why the there is no longer any choice. majority of Ukrainian soldiers in the conflict are Russian- There is no choice. In present circumstances, prolongation speaking.126 But the influence of the parallel state can now of the status quo invites destitution and chaos. Over 40 be felt across the board, from the bottom-up organization of per cent of Ukraine’s coal mines (accounting for 66 per defence in Mariupol to the fabrication of body armour out cent of production) are flooded. Infrastructure has been of household materials, and the provision of winter clothing destroyed and assets confiscated on a colossal scale. By no for soldiers and shelters for families whose homes have means all of Donetsk and Luhansk was a rust belt. Iron and been destroyed. steel accounted for 34 per cent of export revenues. There At the same time, the strength of the parallel state is a was measurable (albeit inadequate) investment in energy commentary on the debilities of the legal state. Compared efficiency and modernization following the gas crises of with the Yushchenko years, there are better prospects that 2006 and 2009. Firms such as the Industrial Consortium the two will converge (an example being the emergence of Donbas undertook complex and highly profitable of Samopomich [Self-Help], which won 33 seats in the construction projects for European customers. Today, its new parliament). Yet the legal state, with its bureaucratic assets are in Russian hands, and its co-chairman, former mastodons, suffocating hierarchies, mindless routines Donetsk governor Serhiy Taruta, is bankrupt.128 In this and idiotic regulations, remains very much in place. matrix, Ukrainian military and National Guard units are not Along with its silent partner, the quasi-criminal shadow entirely free of blame. They fire into civilian areas, though state, it is the gum that fouls every good policy and drives supposedly only when fired upon. all but the toughest reformers to capitulation or mental breakdown. It is this malign synergy, rather than any The challenge for Ukraine is to produce 127 latent Banderist ideology, that has poisoned relations systemic change in penurious circumstances between the largely self-financing territorial battalions and the Ministry of Defence, which has covered up fraud and by lawful means in a country where and theft on an unconscionable scale.The last minister to power and privilege are scorned. This is confront such a challenge, Anatoliy Grytsenko, managed both a constraint and an opportunity. So is to remain in office for almost three years – in the event, public recognition that there is no longer not long enough to produce the ‘irreversible’ changes he any choice. sought. Less than a month after Yanukovych took office, the six deputy ministers and senior officials dismissed This dire economic situation, combined with social by Grytsenko were reinstated. and humanitarian conditions in the east, would pose a The considered wisdom in Kyiv is that President Poroshenko formidable challenge to any prosperous EU member state. and Prime Minister Arseniy Yatseniuk are the least bad In its May 2014 report, the UNHCR described ‘an increasing leaders that Ukraine has ever had. Intellectually, they number of human rights abuses’ in occupied areas, ‘such as understand the necessity for reform as much as anyone. But abductions, harassment, unlawful detentions’ and torture.129 that will not be enough to empower reformers, bring the These practices, along with threats against Jews (which economy out of the shadows and overcome the culture of have reduced the 17,000-strong Jewish community of power and patronage of which they are part. So far, their Donetsk to a rump of several thousand), attacks on Roma actions have been in line with Augustine’s prayer: ‘Lord, and the ‘plunder and pillage’ described by Girkin, form make me good but not yet.’ The differences between the the backdrop to a catalogue of material deprivation and Russian state, which appears to work even when it does breakdown of essential services, threatening communities not, and the Ukrainian state, whose deficiencies escape no with starvation.130 After the destruction of Debaltsevo, 15 one, are threefold: money, coercion and deference to power. buses filled with residents heading west; only one went east. The challenge for Ukraine is to produce systemic change in

126 On 10 November, the battalions were incorporated into the National Guard, though it remains to be seen what impact this will have on their ethos, their command structures and their standards of discipline. 127 Stepan Bandera (1909–59), Ukrainian nationalist leader whose beliefs, actions and legacy remain deeply controversial in Ukraine. 128 Evgeniy Shvets, ‘Serhiy Taruta: “Rinat [Akhmetov] is no longer an oligarch, and I am bankrupt”’ [Rinat bol’she ne oligarkh. A ya – bankrot], LB.ua, 5 January 2015. 129 Office of the UN High Commissioner for Human Rights, Report on the Human Rights Situation in Ukraine, 15 May 2014, p. 4. 130 Amie Ferris-Rotman, ‘The Scattering of Ukraine’s Jews’, The Atlantic, 21 September 2014, www.theatlantic.com/international/archive/2014/09/ukraine-jewish- community-israel/380515/; International Crisis Group, Eastern Ukraine, pp. 17 ff.

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This tableau of grief offers the authorities every ‘conservatives’ and Eurasianists have raised their game opportunity to drive a wedge between local citizens and an as well as the consequences of failure. This is manifestly occupying force. Instead, Ukrainian bureaucracy is helping true for President Putin, who has hoisted himself with them build a ghetto. President Poroshenko’s decree of 14 this ideological petard, however ‘pragmatic’ his own November cutting off social disbursements in occupied views might be. (It is worth recalling that during his first zones would be justifiable if residents could leave and term he appealed to Europe on the basis of the ‘European collect them elsewhere. Instead, a pass regime has been culture’ he now vilifies.132) Moreover, Ukraine is pivotal imposed, passes only arrive after much delay, and local to Russian-sponsored integration projects – and not only officials in neighbouring localities (‘on instructions from in civilizational terms. As Arkady Moshes wrote in 2013, Kyiv’) then impose fresh requirements.131 This amounts to the ‘stagnation of Eurasian integration’ makes Ukraine’s short-sightedness on a strategic scale. inclusion ‘more critical than ever’.133 As a transit hub for energy and a potential platsdarm (bridgehead) of the The country now finds itself in a most paradoxical situation. West, Ukraine’s strategic importance is an article of faith. The war has united Ukrainians as never before. But where divisions remain, they are sharper than they were. Ukrainians Yet the dynamic of today’s policy is as much the product of in occupied zones fear both sides and trust no one. The Minsk inner regime imperatives as of these broader secular factors. accords have cast them into a void, and the authorities in Kyiv Since his re-election in 2012, Putin has narrowed the behave increasingly as if they no longer exist. circle of power and reconstituted the political system in a defensive and illiberal direction. Intellectual claustrophobia and opacity now define a leadership milieu that during Through the Kremlin looking glass Putin’s first term was appreciably more diverse. This ‘closing of the Russian mind’, in Andrew Wood’s phrase, Years before these events, Russia had become a proud, has put certain phobias and nostrums beyond the reach resentful, apprehensive and ambitious power. Fifteen years of evidence or argument.134 of Western dominance have instilled an abiding sense of Chief among these is the presumed determination of the grievance. Brutal and bungled interventions (Iraq) and United States and its ‘satellites’ to isolate Russia, enfeeble serendipitous ones (Libya) have also nurtured feelings of it and deprive it of influence in Europe. As Sergei Lavrov contempt. For the current occupants of the Kremlin and has stated on more than one occasion, the aim of Western a fair proportion of their predecessors, Ukraine is a vital sanctions is not to change Russia’s policy, but its regime. interest on all significant counts: identity, legitimacy, At the same time, the Kremlin perceives that Europe economics and geopolitics. Yet the current conflict has also lacks the mettle and cohesion to pay the price that its become the pivot in a struggle to reshape the post-Cold War principles dictate. Business interests are Europe’s interests security order, which Gorbachev and Yeltsin co-authored, in Russian eyes, and these interests, which require a strong but which many saw as a Versailles-type diktat even before and reliable Russian partner, will eventually reassert Putin came to power. The Kremlin’s objectives and policies, themselves. Moreover, the Kremlin believes that the West and many of its policy instruments, have a strategic is ‘losing its monopoly on the globalization process’.135 focus; yet it displays the utmost flexibility, boldness and Although increasing dependency on China is a source of occasional rashness in tactics. The Russian leadership marked discomfort, the emergence of a world of ‘multiple has proved to be an astute judge of the weaknesses of values centres’ is seen as conducive to Russian interests opponents, but as the present conflict shows, it can be even if it offers little practical help. Finally, nothing a poor judge of their strengths. that has occurred in Ukraine since November 2013 has One need not sit inside the Kremlin to understand that dislodged the axiom that ‘Ukraine cannot stand alone’. Ukraine’s incorporation into the European system will The second Maidan is viewed as a US special operation, have repercussions inside Russia and its governing elite. as was the first. From this perspective, Ukraine’s moral Ukraine is not just any neighbour but a core component investment in its own survival is irrelevant. One will of what many Russians see as the ‘Russian world’. By look in vain for anyone in Russia who believes that the defining Russia in ‘civilizational’ terms and juxtaposing ‘Banderist clique’ in Kyiv can survive without ever greater the ‘distinctiveness’ of russkiy mir to the liberal, post- levels of Western support. modern and multicultural values of the West, Russia’s

131 Meeting notes shared in confidence by an experienced Western consultant, November 2014; letter from a friend of the author in Donetsk, March 2015. 132 See Putin’s speech to the German Bundestag, 25 September 2001. 133 Arkady Moshes, ‘Will Ukraine Join (and Save) the Eurasian Customs Union?’, Policy Memo 247, PONARS Eurasia, April 2013. 134 Andrew Wood, ‘Reflections on the Closing of the Russian Mind’, The American Interest, 3 November 2014. 135 Sergei Lavrov, ‘The Present and the Future of Global Politics’, Russia in Global Affairs, No. 2, April–June 2007, http://eng.globalaffairs.ru/number/n_8554.

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In their masterful study The Menace of Unreality, Peter Clarity and purpose Pomerantsev and Michael Weiss depict Russia’s information offensive in the West as a potent synergy of innuendo, false Against one benchmark of assessment, its own burdens and analogies, non sequitur and contradiction.136 Yet this might priorities, the West’s response to events since February 2014 also serve as a commentary on how Russia disinforms itself. has been impressive. Against a second, Russian tenacity, the The synergy is regularly refreshed by the elements of truth adequacy of this response is far from certain. For the West that it doubtless contains. Reality checks, where they have to raise and maintain its game, several revisions of thinking occurred, have led to a redrawing of lines rather than a re- and practice warrant consideration: examination of underlying assumptions. • Whether the West plays its cards well or badly, it The Kremlin has difficulty understanding that Europe’s faces a protracted struggle with Russia. The ‘crisis’ divisions are not objective facts defined by immutable paradigm (which stimulates a Pavlovian search political fault-lines, but realities subject to change. Putin is for ‘endgames’) is illusory. Over the past 20 years, also temperamentally averse to the idea that for Europe’s Russia has attempted to limit the sovereignty of elites, rules matter and partnership with Russia requires neighbours within the framework of a treaty regime mutual trust as much as material interest. His interpretation that recognized no such limitation. It has now torn of the West’s motivations and agenda assumed that Europe’s up that framework. Today there is no international attachment to the post-Cold War system was as cynical as law east of the Narva and Prut. Putin’s resurrection of his own. Owing to these faulty premises, he was unprepared the notion that language and ethnicity – rather than for the alienation of Angela Merkel and the reinforcement citizenship and internationally recognized borders – of transatlantic links. Thus the EU’s adoption of Tier 3 are the proper basis of statehood is a test for the legal sanctions under German leadership and in unison with order elsewhere. Statements by Lavrov and Deputy the United States came as a complete surprise. Foreign Minister Konstantin Dolgov to the effect that But arguably Putin’s greatest error was to underestimate Moldova and the Baltic states should ‘consider events the resilience of Ukraine. Two months after the Kremlin in Ukraine and draw conclusions’ confirm that major 137 declared that ‘Ukraine is ours’, Yanukovych fled in disgrace, interests are at stake. These interests will not be and Russia found itself with no influence at all. Within protected by a patch-and-mend approach. weeks, the state re-emerged. Ukraine reconstituted military • The West therefore faces stark choices. The merit of force and by May 2014 had begun to win battles against the the ‘realist’ prescription – that Russia be conceded insurgents. Outside its initial strongholds, the insurgency its sphere of influence – is that it goes to the heart failed to gain a critical mass, and by late summer it was on of the matter. The defect of the prescription is that the point of collapse. Europe will not be able to endure it. We are no longer None of this means that the Kremlin cannot achieve its core in a 19th-century world where ‘zones of security’ objectives: to create a semi-‘mobilization’ regime at home, can be produced by lines on maps or people treated to wreck Ukraine if it cannot control it, to preserve Russia’s like furniture in a room. Betraying Ukraine – what western borderlands as a ‘privileged space’ and to make else would it be? – and, soon enough, Moldova and Europe accept that ‘there can be no security without Russia’. In Georgia will add to the stock of Vichyite states in any serious undertaking, there are mistakes and setbacks. But Europe with no love for what remains of the West, in the Russian mind war is a clash of wills, not an accounting and even less respect. It will then be entirely rational exercise. The Kremlin’s cognitive framework contains some for Latvians or Poles to ask why, if the West is hard truths for Western policy-makers: an existential faith unwilling to uphold the Paris Charter by means short in Russia’s greatness, a willingness to accept risk, damage of war, it should be willing to uphold the Washington and opprobrium in the service of enduring state interests. Treaty by means of war when ‘hybrid’ threats arise. ‘He who wills the end wills the means.’ Russia’s custodians • The West is then left with the task of defending the believe that ‘reform’ and trust in the country’s enemies led to post-Cold War settlement and deterring those who the USSR’s collapse, and they have no intention of repeating would damage it further. To some, it is axiomatic that experience. These predilections suggest that the path to that this will lead to a ‘new Cold War’.138 Very accommodation will be long and arduous. possibly.139 But the Cold War was not the reason for

136 Peter Pomerantsev and Michael Weiss, The Menace of Unreality: How the Kremlin Weaponizes Information, Culture and Money (The Interpreter, Institute of Modern Russia, 2014), p. 5. 137 Lavrov’s statement at Valdai Club meeting, 23 October 2014. 138 Samuel Charap and Jeremy Shapiro, ‘Consequences of a New Cold War’, Survival (IISS, April/May 2015). 139 But not in that form. See James Sherr, ‘Russia and the EU: The End of Illusions?’, Heinrich Böll Stiftung, June 2014, https://www.boell.de/sites/default/files/e- paper_aupo2014.pdf.

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East–West discord. It was the result. It arose because West’s terms, at least so long as other tools of policy fundamental interests were in dispute, and it ended existed. Those tools are force and the threat of force. when they ceased to be in dispute. Today they are in Because of them, time works even less to Ukraine’s dispute again. Had there been no Cold War, the issues advantage than to Russia’s. Ukraine and its Western at stake in Ukraine would be no different from what partners need to find a way of devaluing these tools they are now. Either the West bases its interests on and turning time to their own advantage. That will a Europe of sovereign states, free to chart their own require deterrence, not only on Ukraine’s western course, or it resigns itself to a coerced stability and the border but within the country too. The West has certainty of future conflicts. already undertaken modest measures to improve Ukraine’s defences. We do not know how Putin will • Ukraine’s sustainability as a sovereign state and respond if they gather momentum. What we do know an integrated one depends first and foremost on is how he responds to weakness. Ukrainians. Nevertheless, they cannot succeed without Western support. That support must be It is time to abandon the notion that the Kremlin is multi-dimensional, well resourced and toughly concerned about anybody’s welfare other than its own. conditional. Strategic patience is needed as well. As the leaders of the Ukraine insurgency themselves A weak and fractured state is at war with a nuclear lament, they are but pawns in a bigger game. In this power. Ills that are embedded and systemic cannot struggle, Moscow does not care whether its ‘compatriots’ be remedied without time and resources. Both the flourish or starve. It does not care about Western aid provided and the aid envisaged by the European goodwill unless it can be used against the West. Union, United States and International Monetary Nevertheless, Russia’s policy will change when its Fund are a life-support system, but not a launching governing elites conclude that the current course is pad for reform. In seeking an alchemy that will damaging the country’s interests and their own. With underwrite reforms without deferring them, financial firmness and patience, that outcome is achievable. The long- assistance must be matched by institutional support term aim of Western policy should be to remove the new and elements of co-management. dividing lines that Russian policy has created. Meanwhile • Towards Russia, strategic patience might not be Western governments should be alert to any signs of ‘new enough. In the long term, time works against it. thinking’ in the country and give thought to the contours of Within two years, the combination of sanctions and a diplomatic settlement that Russia might one day wish to low oil prices is likely to have a debilitating effect honour. But until the premises of Russian policy change, any on the Russian state. Yet it never was likely that the agreement is likely to be the opposite of a solution, and any Kremlin would agree to a war of attrition on the respite gained is likely to be very short-lived.

32 | Chatham House 5. Russian Foreign Policy Towards the West and Western Responses James Nixey

Introduction According to the Kremlin, it is the West that has destroyed the rules, so Russia must act in its own interests. Russia, Russian foreign policy did not suddenly change in 2014 with it then follows, is no worse than the West and therefore the crisis over Ukraine. Many debate whether we are in a lecturing will not be accepted. In other words, Russia’s ‘new Cold War’,140 but a newly assertive Russia is a misnomer. borders are, for its leadership, provisional – determined by Neither the Kremlin’s threat perspective nor its ambition in accidents of history142 and to be adjusted when necessary. the form of a challenge to European territorial integrity is Well before 2014 Moscow was prepared to use military markedly different from what it has been in the past 10 years. instruments – to limit Georgian geopolitical orientation Russian foreign policy, for all the challenges it presents, has (notably in 2008), as well as to make aggressive moves in been telegraphed. Moscow has been nothing if not consistent. the energy and trade sectors. But the change of tempo is Indeed, the deterioration of relations with the broadly signalled by a greater willingness to take strong reactive defined West long predates not only the tumultuous events action. This was previously viewed as unrealizable but of 2014, but also the colour revolutions in other parts of Vladimir Putin was presented, unexpectedly, with a the former Soviet Union, the 2008 war in Georgia, the historic opportunity in Crimea to act while meeting Arab Spring of 2010–11, and the anti-government street only minimal resistance. protests in Russia in 2011. All these significant occurrences Notwithstanding the continuity in Russian foreign policy, are frequently but incorrectly cited as initiators of a sea- the picture has become starker and clearer since 2014. change in Moscow’s attitude to the external world, which Russia’s foreign policy play is increasingly transparent to is, in reality, over a decade old. The Russian leadership may all but those determined not to see it. The leadership’s have misread them (as Western-inspired), but none made ambitions are now in plain sight: in the former Soviet the Kremlin change its course because it was already on a Union, Russian control over the other states’ political distinctly hostile path. orientation is demanded with various degrees of stringency, but there is a fundamental insistence on Russia’s foreign policy play is increasingly acknowledgment of Russia’s primacy around its borders. transparent to all but those determined In particular, Ukraine is required, at a minimum, to be not to see it. declared neutral and subject to the Kremlin’s discretion to interpret any new concords for this region. From Europe, Thus the West was unprepared for the Crimean invasion and Moscow demands compliance over its trade practices, annexation, but it should not have been surprised.141 Policy- while it continues to play divide-and-rule with individual makers, especially in Germany, were deaf to pleas for caution member states of the EU, consolidate its status as a long- in integrating Russia into Western structures before it was term energy partner and call for a new European security ready with a rules-based economy and society, because those architecture (with its subtext of a Russian veto). With the warnings did not fit the West’s chosen narrative. In short, United States and NATO, acknowledgment of Russia’s there was a refusal to see Russia as anything other than some equal status is a clear requirement – in effect, another veto form of qualified or quasi-partner, real or at least potential. over major global decisions. In Asia, increased trade and having China as an ally are the main ambitions. The rest of What has changed is the tempo, never the leadership’s the world is seen as relatively less important. Ukraine has intentions. This is not to suggest that it has always been the taken the oxygen from broader foreign policy questions. goal to invade Ukraine. Indeed, the Kremlin’s foreign policy However, the leadership sees economic mileage to be in 2014 was characterized by a great deal of opportunism. gained from some countries in Latin America, and views But the prevailing view in Moscow is still that Russia was it as important that US power is not boosted by successes strong in Soviet times and weak in the 1990s, and that it is in the Middle East. now, apparently, strong again (in spite of what it perceives as an attack on its economy), largely by virtue of its nuclear The following sections explore these issues with regard to arsenal. Agreements made in the 1990s under pressure, Russia’s immediate periphery, Western Europe and the EU, in Moscow’s view, are deemed to have no validity now. and the United States.

140 For a good exposition, see Andrew Monaghan, A ‘New Cold War’? Abusing History, Misunderstanding Russia, Chatham House Research Paper, May 2015. 141 See, for example, warnings that Crimea could be next, by security specialist Alexei Arbatov, ‘Yushenko Sentenced the Black Sea Fleet’, Novaya Gazeta, 22 May 2008, http://www.ng.ru/cis/2008-05-22/1_yushenko.html; Askold Krushelnycky, ‘Crimean peninsula could be the next South Ossetia’, the Independent, 28 August 2008, http://www.independent.co.uk/news/world/europe/crimean-peninsula-could-be-the-next-south-ossetia-910769.html; or Sergey Zayats, once the administrator of Sevastopol’s largest district, ‘In Black Sea port, Ukraine is sovereign, but Russia rules’, McClatchy DC, 19 September 2008, http://www.mcclatchydc. com/2008/09/19/52808/in-black-sea-port-ukraine-is-sovereign.html. 142 For example, Putin has referred to the Winter War with Finland in 1939–40 as an example of a strong Russia necessarily correcting border mistakes. See ‘Putin Justified the Attack on Finland’, inoSMI.ru, 22 March 2013, http://inosmi.ru/sngbaltia/20130322/207240868.html#ixzz3S5xXW1XV.

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The broad directions of Russian foreign policy addressed this increasing reality. The Kremlin’s did not. Contrary to here are not designed by people or institutions such as popular belief, the West does have a policy of sorts towards the minister or ministry of foreign affairs, or the allegedly the ex-Soviet states; that is to no longer let Russia ride influential deputy chief of staff responsible for foreign roughshod over them. This policy may be underfunded policy, Yuri Ushakov, and thus only a longer exposition and inconsistent, and at times amounts to little more than could and should address such strategically impotent ‘somebody should do something’. But the Western rhetoric has officials and their departments. at least changed to counter the Russian leadership’s bombast. In practice, of course, Russia does also curtail each A shared neighbourhood: dominance of the other states’ independent ambitions – also to varying degrees, ranging from the relatively low Russian and conflict penetration of, say, Tbilisi-controlled Georgia or Azerbaijan, to the acquisition of large parts of the Armenian economy Russia’s neighbourhood is not shared as far as the majority or a Moscow-installed puppet president in Kyrgyzstan. Most of Russian public and elite opinion is concerned. The crux former Soviet states at least pay lip-service to aspiring to of ‘the Russian challenge’ lies in the possessive attitudes closer relations with the West. But whether they kowtow towards the other 14 former Soviet states evinced by both to Moscow or rebel against it, they all pay a price in curbs 143 the leadership and the population. Not having undergone on their sovereignty. de-Sovietization, Moscow’s view was and is that the larger parent state has pre-eminence over the smaller and the The current conflict between the Kremlin and the West is in weaker ones. For the Kremlin, centuries-long ascendancy the main due to the confluence of the Russian elite’s largely awards it rights to modern-day control. Soviet and Tsarist legacy mindset, the West’s attitudes towards the non-Russian post-Soviet countries since 1991, Moscow further believes that NATO and the EU will never and each of those 14 countries’ own flourishing senses of grant membership to countries with unresolved conflicts identity and changing assumptions of Russia’s trajectory. and whose borders are disputed. This belief is not without Neither the leadership nor the majority of the population of reason since the EU and NATO have themselves stated as a single one of these states desires a return to the Russian much, though not explicitly in the Lisbon Treaty or the fold. This does not, however, dissuade the Kremlin. Russia’s North Atlantic Treaty. Of the six countries in the Eastern prerogative, as it sees it, trumps the other countries’ rights 144 Partnership, for example,only one, Belarus, is not party to to exercise full sovereignty – particularly in their foreign an unresolved conflict with significant Russian involvement. policy orientations. Moscow’s assumptions as to what But it is under Moscow’s control anyway – President Russian speakers in ex-Soviet states want are also a factor. Alexander Lukashenko’s recent awkward behaviour for the The leadership is attempting to push back the tide with Kremlin is only the latest in a series of U-turns. There is a limited immediate success and to no long-term avail.146 This certain logic, then, not just to domination but to starting suggests that the Russian elite really is ‘on the wrong side or sustaining conflicts that will, as the leadership sees it, of history’, as Barack Obama has stated.147 repel ‘Western encroachment’.

As Russian-imposed constraint is unacceptable (to varying Countries under the thumb degrees) to each of the 14 countries, it has slowly become unpalatable to the West by extension. It was not always By repudiating more clearly than ever the post-Soviet thus. In the heady days of early 1990s’ independence, the ‘settlement’, Moscow has raised questions over an arc from West, led by the US, pursued a ‘Russia first’ policy145 based the Baltic states through Eastern Europe to the Caucasus and on the belief that Russia would evolve towards common Central Asia. Further trouble is conceivable: for example, views and a democratic structure. Real autonomy for the Dmitry Rogozin, a deputy prime minister, has floated a 148 ‘newly independent states’ was seen as being of secondary change of status for Transnistria. Some even more hawkish importance, but the West’s view gradually accommodated elements are casting envious eyes on Kazakhstan with its

143 In a 2014 Levada Centre report only 32% of those surveyed wanted Russia to remain in its current borders, 58% believed Russia’s borders should expand, including 17% who thought Russia’s borders should contain all the former Soviet States – ‘Public Opinion 2014’, Levada Centre, March 2015, http://www.levada.ru/sites/ default/files/om14.pdf, p.158. 144 Consisting of Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. 145 This was the essence of George H. W. Bush’s ‘Chicken Kiev’ speech, in 1991, which cautioned against nationalist uprisings in the ex-Soviet republics. 146 James Nixey, The Long Goodbye: Waning Russian Influence in the South Caucasus and Central Asia, Chatham House Briefing Paper, 2012. 147 Comments to the press on 3 March 2014, Washington DC, reported in ‘Obama: Russia’s actions in Ukraine put Putin on the ‘wrong side of history’’, the Guardian, 3 March 2014, http://www.theguardian.com/world/2014/mar/03/russian-sanctions-likely-putin-ukraine-crimea. 148 See ‘Evgeniy Shevchuk: Transnistria is Ready for a Referendum on Self-Determination’, Komsomolskaya Pravda, 11 November 2014, http://www.kp.ru/ daily/26305/3184392/; or ‘Rogozin: Russia Continues to Support Transnistria’, RIA Novosti, 11 November 2014, http://ria.ru/world/20141111/1032816550.html. Changing the status of Moldova is effectively what the ‘Kozak Memorandum’, written and rejected in 2003, was intended to do.

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large ethnic Russian population and oil wealth.149 Putin and status it had accorded Abkhazia, first by giving itself more Kazakhstani President Nursultan Nazarbaev are relatively official control under a November 2014 treaty and then by close, but the latter runs a tight, clan-based regime which eliminating border controls altogether in February 2015. is harder for Russia to penetrate. When Nazarbaev departs, however, presumably within the next 10 years, northern Customs, Economic and Eurasian Unions Kazakhstan may be in the Kremlin’s crosshairs, especially if the wider geopolitical situation deteriorates. Belarus is Vladimir Putin has long convinced himself that ‘colour probably even more at risk if it were to undergo a ‘colour revolutions’ (as in Georgia, Ukraine and Kyrgyzstan) revolution’. And in Tajikistan, there is great concern in are directed from the United States and, as with Dushanbe’s government that 250,000 Tajik migrants in supposed direct US support for the Arab Spring, have a Russia now have Russian passports. These migrants could malign geopolitical purpose. As noted over the Russian become the focal point for a xenophobic backlash. Tajikistan interpretation of NATO’s intentions in Crimea, such false has reportedly seen a 20 per cent drop in remittances since perceptions are nevertheless a reality to the Russian the summer of 2014.150 leadership. To counter this, the Eurasian Union is Putin’s big geopolitical idea to consolidate people and lands – his self-declared front-line of continuity. While he appears to The Black Sea concede that a Soviet Union Mark II is impractical if not In the Kremlin’s view, if access to the Black Sea with its undesirable, the putative borders of the Eurasian Union do, warm-water coastal ports were restricted, its regional coincidentally, conform to those of the USSR, minus the influence would contract. The Russian military elite sees probably-lost-to-Europe Baltic states. regaining Crimea as momentous in restoring strategic Putin’s Eurasian Union is still a long way from becoming a competences. Military support for and renewal of the Black real political entity. He has been forced to move slowly with Sea fleet is under way.151 Some analysts have suggested that the other newly (if nominally for him) independent former this indicates an effort to restore the peninsula as a platform Soviet states. The alliance evolved from a straightforward for power projection into the Black Sea and beyond – and to customs union in 2005 to a Eurasian customs union in 2010, prevent its loss were a pro-Western Ukrainian government becoming the Eurasian Economic Union in 2015 – all useful to revisit the Kharkiv Treaty granting Russia leasing rights economic preliminary steps towards a full – i.e. political – until 2034.152 Heavy militarization outside Sevastopol Eurasian Union. This, finally, is intended to provide Russia suggests that Crimea is intended to be a bridgehead – not with the instruments for control in creating an alternative dissimilar to Kaliningrad. It is conceivable that the Kremlin pole to the EU-centric order. But the Eurasian Union is really did think, as it has contended, that had it not acted, intended to be more than a legal framework for dominion the new Ukrainian government would have invited NATO over ‘wayward’ one-time dependencies – it is designed into Sevastopol. to be a new geopolitical force capable of standing up to Russia is now likely to seek to translate land-based gains all competitors on the world stage. Eurasianism provides into an extension of its maritime territory in the Black the ideological glue and Russia, of course, is the self- Sea, by claiming Ukraine’s continental shelf and exclusive appointed head of the Eurasian civilization. The concept economic zone as its own. In addition to serving Russia’s of Novorossiya is an ideological extension and historical wider geopolitical agenda, such a move could offer access justification of this project.153 to unexploited hydrocarbon deposits. Other countries Each iteration of the union has so far had only moderate bordering the Black Sea would almost certainly not success in attracting members among a wary group of recognize the legality of such a claim, but Moscow could try countries. Membership has been limited to those countries to circumvent their objections by unilaterally renegotiating over which Moscow has the greatest hold. Russia’s maritime boundaries with them. This may explain why worsening economic situation means that the union is Moscow has incrementally changed the independent

149 The Foreign Policy Concept of the Russian Federation sets out Russia’s obligations to its diaspora population, particularly in CIS countries. See, for example, Article 5 and Section IV: http://kremlin.ru/acts/news/785. 150 Jack Farchy, ‘Tajikistan looks to China as Russian remittances dry up’, Financial Times, 22 October 2014, http://www.ft.com/cms/s/0/2c87ee20-58f9-11e4-9546- 00144feab7de.html#slide0 [subscriber access]. 151 Details of military reinforcement and reform of the basing system of the Black Sea fleet in Sevastopol by summer 2015, and future plans, can be found in Dmitry Boltenkov and Maksim Shepovalenko, ‘Russian Defense Arrangements in Crimea’, Moscow Defence Brief 43 (5), 2014, http://www.mdb.cast.ru/mdb/5-2014/item4/ article1/. 152 See Roy Allison, ‘Russian “deniable” intervention in Ukraine: how and why Russia broke the rules’, International Affairs 90: 6 (2014), pp. 1278 and 1280. 153 Putin first mentioned the concept ‘Novorossiya’ in his ‘Address to the Federal Assembly’ on 18 March 2014. Novorossiya was the name of the formerly Ottoman territory conquered by the Russian Empire in the Russo-Turkish Wars, which now covers much of southern and eastern Ukraine. It became part of the Ukrainian Soviet Socialist Republic during the Soviet period. Since the dissolution of the Soviet Union the term ‘Novorossiya’ has been used controversially by Russian nationalists.

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becoming less and less attractive and Russia is incurring more alternatives. It is better able to wean itself off Russian further costs to support it.154 Had Ukraine joined, the energy and it is already doing so steadily through use of Eurasian Union would have extended westwards right up to new energy sources. Even now the EU looks to Russia the EU’s borders. But this key element – and probably the for only 10 per cent of its total trade,158 and European whole enterprise – is stalled at best because the Ukrainians holidaymakers will never flock to Russia in large numbers. have created new facts on the ground. The diversification process in Europe is outpacing Russia’s efforts to diversify towards Asia. That is not to say that Europe can (or should) isolate itself from Russia – just that Europe, the slow irritant the effects of disentanglement will be felt more keenly in Russia than in Europe. Before 2014, there was an undeniable ambiguity in Before 2014 most leaders were willing to ignore the European policy towards Russia, as the EU looked to reach Kremlin’s misdemeanours – to hold their noses and out, trade and integrate while at the same time expressing continue to trade and talk of partnership. The Ukraine crisis concern and criticism about Russia’s departure from has made this no longer politically possible. The need for European norms and values. Many had mistakenly thought unanimity, while debilitating in its slowness, also has the Russia was part of the post-Cold War peace order merely effect of shaming most European countries into action. And because it was no longer a communist state. A ‘Partnership while many have demurred – generally those with close for Modernization’ was the EU’s best hope for bringing dependencies on Russia and those that are too far away for Russia under international law. it to matter to them – the ‘Russian question’ has undergone a belated reassessment in foreign, defence and even trade Before 2014 most leaders were willing to ministries across the continent. ignore the Kremlin’s misdemeanours – to hold their noses and continue to trade and Germany changes tack talk of partnership. The Ukraine crisis has made this no longer politically possible. Moscow has few allies in Europe. This was not always the case. For over a decade, Germany’s 1990 reunification determined its attitude towards Moscow: many were still However, the Kremlin’s inability to get along with Europe grateful that Mikhail Gorbachev did not ‘object’. This can be attributed to a number of factors including (but not attitude was subsequently reinforced by a business-first limited to) political differences, size mismatch, mutual mentality,159 and it defined Germany’s broader Russia policy suspicion and broad disdain. This disdain can be broken until well into 2014.160 However, the considerable German down into the Russian leadership’s perception of the EU investment in Russia since the fall of the USSR included as weak, ineffective and leaderless, with a failed economy, a strong normative element in an attempt to bring it into as well as an incomprehension of its procedures, checks, the fold. The Russian leadership, however, saw Germany’s balances, rules and regulations, and a dislike of its liberal investment only as a business package. values. The partial loss of sovereignty that adopting EU rules entails is anathema to Moscow, but perhaps more Germany is now leading the new wave in robust Russia important is that it sees a nexus between membership of policy – to an extent that has shocked the Kremlin, the EU and future NATO accession. which had mistakenly believed that their business- driven relationship would transcend ‘local difficulties’ in Yet the Kremlin well knows that it is economically and Moscow’s self-proclaimed backyard. Putin’s intransigence culturally bound to Europe, still the destination for 48 per forced a patient Chancellor Angela Merkel to adopt a cent of Russia’s trade,155 78 per cent of its tourists156 and radically different stance over the course of approximately 80 per cent of its pipelines.157 The process of disentangling 40 phone calls and three face-to-face meetings in 2014. on both sides will be slow and limited. Europe and Russia Distaste had previously been overcome by pragmatism. are not in a relationship of equals, however. Europe has

154 Andriy Kovalenko, ‘The Mythical Benefits of the Customs Union’, Ukrainian Week, 31 March 2013, http://ukrainianweek.com/World/75913. 155 World Trade Organization, Russian Federation Trade Profile, http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=S&Country=RU, accessed 30 April 2015. 156 Source: European Travel Commission, ‘European Tourism in 2013: Trends and Prospects’, 2013. Report accessed through slideshare 30 April 2015: http://www.slideshare.net/MarinetLtd/european-tourism-2013. 157 US Energy Information Administration, Russia Overview, http://www.eia.gov/countries/cab.cfm?fips=rs, accessed 30 April 2015. 158 European Commission, ‘European Union, Trade in Goods with Russia’, 12 March 2014, http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113440.pdf. 159 Some claim 25,000 jobs in Germany are in danger as a result of the sanctions. There are 6,000 German enterprises in Russia with Russian capital (Ost Ausschuss der Deutschen Wirtschaft, ‘Ost Ausschuss-Umfrage zur Ukraine-Krise’, 27 June 2014, http://www.ost-ausschuss.de/node/714; http://www.ost-ausschuss.de/node/714). 160 For example, as chancellor, Helmut Kohl did not visit the Baltic states as he did not want to offend Russian sensibilities.

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Over the course of the year, that pragmatism gave way have a new security relationship involving binding treaties to what Merkel came to regard as a necessity if the which would prevent external meddling in Ukraine and European security order was to be defended. With an reinforce the country’s independence. The Kremlin simply initially reluctant but increasingly supportive German does not want that; its definition of European security business community behind her, and after consultation differs too greatly.161 with the United States, Merkel ensured that the German Putin’s policy is to divide, and he has found profitable position on Russia became a beacon for others in Europe. splits into which to drive wedges. For Moscow, leverage is Although the chancellor’s 10 May 2015 visit suggests better gained through bilateral relationships. It has sought continued inconsistency at best, the primacy of politics to exploit differences of opinion between EU member over economics has now been broadly accepted by the states. The EU, meanwhile, often fails to function as an commercial sector and the wider German electorate. effective geopolitical counterpart to the unitary Russian Unlike anywhere else in Western Europe, this is their state. Moscow, in effect, is attempting to challenge the number one foreign policy issue. EU’s role as a viable model to be emulated. Putin is not Germany’s evidence-based stance – initially giving Russia so much asking for a delay in the implementation of the the benefit of the doubt, then acting firmly – may have EU’s tariff-eliminating Deep and Comprehensive Free helped pull other European countries, most notably Norway Trade Agreement (DCFTA) as insisting on a change in its and the UK, along in its wake, even to the detriment of their substance to benefit his own Eurasian variant. To agree to own economies. this would be to jettison 10 years of EU policy. Putin has also said in a letter to President Petro Poroshenko that any decision to implement the DCFTA will trigger Other European countries counter-sanctions.162 France, meanwhile, has indefinitely postponed delivery Moscow’s advantage, when dealing with the EU, is that it of its Mistral-class amphibious assault ships to Russia, is playing a high-risk game against low-risk players. But but could still be biding its time until it is less politically its calculation that business interests in the West would uncomfortable. President François Hollande has put up trump geopolitical considerations has thus far been proved with sanctions but began calling for their suspension incorrect, as Germany has showed. The Kremlin’s actions once a first ceasefire was agreed in Minsk, only to fall in 2014, unlike in 2008, have had a profound effect on the silent again once that was broken by Russian troops and resolve of many European countries to stand up to Putin, Ukrainian proxies in early 2015. With each freshly minted even at economic cost to themselves – as seen, for example, ceasefire agreement comes an inevitable call by Paris for in Moscow’s retaliatory agricultural and food-related sanctions to be lifted. Ukraine is still viewed by many in sanctions targeted at the West. France as part of the legitimate Russian sphere. Others in Europe are even less embarrassed in their support The EU’s motives and actions for the Russian leadership’s course of action. In June 2014, for example, Putin received red-carpet treatment in Austria, According to one recent poll, 58 per cent of EU citizens are where Moscow has extensive networks; and he got a hero’s even willing to risk conflict (broadly defined) with Russia in welcome in Belgrade and Budapest in late 2014 and early order to support Ukraine.163 But the EU bureaucracy is torn 2015 respectively. between its desire to back the rule of law and its fear of the consequences of enforcing the law. Moscow’s motives and fears A technocratic partnership with Russia is natural to the EU’s way of acting – as a means of exporting good governance. In the states sandwiched between them, the EU and But its major foreign policy experience is enlargement, with the Kremlin have largely incompatible interests and no political target. The side-effect, therefore, has been that irreconcilable differences. The Kremlin fears the EU regional issues such as ‘frozen conflicts’ have not been at the because of its attraction for former Soviet states, and top of the agenda. Another mistake was that the EU was not because it is based on principles and economic norms that steadfast on conditionality. It put a lot of effort into building are in opposition to the system in Russia. It is now beyond bridges, the existence of which Putin now denies. Evidence doubt that the West and the Russian leadership cannot

161 However, the respected Russia and Eurasia security analyst Neil Melvin makes precisely the opposite point – that new agreements are needed – in ‘EU needs new Ukraine strategy’, EU Observer, 28 March 2014, https://euobserver.com/opinion/124413. 162 Robin Emmott, ‘Putin Warns Ukraine Against Implementing EU Deal – Letter’, Reuters, 23 September 2014, http://www.reuters.com/article/2014/09/23/us- ukraine-crisis-trade-idUSKCN0HI1T820140923. 163 Transatlantic Trends, Key Findings 2014, German Marshall Fund of the United States, pp. 9, 46 and 48.

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of misdemeanour was continually ignored because it did not responses to Russia – preferring approaches couched in fit the narrative of a developing partnership. doctrinal terms such as ‘strategic patience’.166 He sees Russia as a troublesome regional power distracting him The crisis in Ukraine is a European war, and if things go from his focus on domestic rejuvenation, and he does not wrong it will be Europe that pays the price. It is also a want another foreign adventure after Afghanistan, Iraq and wake-up call for something even more serious: Europe Libya. Washington’s approach is therefore instrumental: the needs a new approach if it is to be an effective force to predominant American stance has been that Russia is needed its east. But it is probably at the limit of its unity. Only if in the Middle East, although it is not clear what benefit that European economies continue to bounce back and Russian has brought, and Putin has taken advantage of the situation. foreign policy behaviour deteriorates still further will that unity be fortified. America the tough?

The US benchmark Yet as shown in its push on sanctions, Washington does have a more robust approach to Moscow than most of Europe. This can be attributed to a combination of being a Although his core policy has not changed, it is apparent unitary actor, pressure from the Republican Party and, to a that Putin’s dislike of America has intensified since his lesser extent, the vestiges of a Cold War mentality. Much, titular return to the Kremlin in 2012. Whatever its cause too, has been made of America’s economic independence – a sense of betrayal over mission creep in Libya, belief from Russia, particularly in the energy sphere; it does that the United States was behind the colour revolutions, 15 times less business with Russia than with the EU.167 or simple jealousy over its continued pre-eminence in the Administration officials are concerned about the rift with world – the Russian president’s vitriol towards the US the EU over sanctions on Russia, but the tougher American administration is now manifest in most of his foreign policy line ultimately owes more to politics than trade. Obama has speeches.164 Moscow portrays itself as anti-American – anti- been let down by Putin too many times and, like Merkel, has hegemonism – yet it continues to regard the United States become disillusioned. The biggest failing, however, has been as the geopolitical status benchmark against which it judges the self-delusion of expectations. Too much was invested its own success or failure.165 Emulation is not the aim; the in the ‘Reset’ and there was no contingency plan. That was Kremlin does, however, shout loudly for respect and for a crude and ignorant attempt to seduce President Dmitry ‘equal status’, which it sees as one and the same thing. Medvedev away from Putin’s influence. Obama spent more time with Medvedev during the latter’s nominal presidency The Middle East factor than with any other major world leader, but the ‘Reset’ had failed even before the end of his first term. The majority view among the Russian elite is that the United States has a weak president who does not believe in American power but rather is committed to managing Prospects American decline – a man who had voted against the invasion of Iraq in 2003 and who in 2013 failed to respect The West had hoped time would be a healer for Russia and his own ‘red line’ over the use of chemical weapons in its leaders, but instead Vladimir Putin sees his country as Syria (even though Congress bore more responsibility for facing a weakening Western adversary. He will try to break this decision). Putin could not fully protect Syria from the apart Western unity, such as it is, especially if he does not non-military Western response, but he did make Barack achieve his goals in the former Soviet space, and he will Obama look weak while also saving him from unpopular continue to interpret Western approval for democratic military action against Bashar al-Assad through a Kremlin- transformation in former Soviet states as a threat. brokered deal. This was a key turning point in Moscow’s attitude. Having faced down the United States and Moreover, Putin’s strategy towards the West will continue prevented regime change in Damascus, it then felt able to reflect a drive for greater Russian political and military to act more confidently. assertiveness. Russia’s perception of itself as more than a European country – as a power with regional and global Obama has tended to look for quick fixes such as the ‘Reset’, interests – will become further entrenched, even though and he has tried to avoid tough decisions and strategic its position in the world is declining both in comparative

164 See, for example, the transcript of Vladimir Putin’s 18 December 2014 news conference with relevant parts highlighted: http://eng.kremlin.ru/transcripts/23406#s. 165 Previously, the benchmark for economic success was to achieve the standard of living of the poorer EU members, such as Portugal. 166 US National Security Strategy, February 2015, http://nssarchive.us/wp-content/uploads/2015/02/2015.pdf. See President Obama’s two-page preface. 167 ‘Russia’s trade ties with Europe’, BBC, 4 March 2014, http://www.bbc.co.uk/news/world-europe-26436291.

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terms and relative to its own ambitions. Therefore, Moscow’s grounds to give it the benefit of the doubt. Further cooperation with Europe cannot and will not proceed further Kremlin miscalculation has the potential to cause further in the medium term. destabilization, intended or not. The continued near- neglect on the part of the West suggests there will be no Moscow’s ambition is for two unions – West European diminution of conflict. and East European (Russian) – which balance each other and compete. This aspiration puts Russia definitively Russia has dwindling resources, but it does still possess outside Europe and its core institutions for at least the political skills and resolve. It holds the initiative and decides next 10 years.168 which moves to make: to scale up or down. To a certain extent, the West will have to accept that dealing with The West will have to accept that dealing Moscow will remain difficult; but the richer, more resilient with Moscow will remain difficult; but the part of the world, which can project power outside its own region and is arguably home to the dominant global richer, more resilient part of the world, ideology, ought to be able to do more than react. Every signal which can project power outside its own before and after the Ukraine crisis has indicated a reluctance region and is arguably home to the dominant by the West to act to defend its own interests against Russia’s global ideology, ought to be able to do more encroachment. The West has been too timid. than react. Conclusion A form of suzerainty by Moscow over Ukraine, if well disguised, might work. But it may also encourage the So Western resolve is being tested. The sanctions-based Russian leadership to embark on further adventures in policy is not directly aimed at provoking regime change in pursuit of what it sees as its interests. The danger is that Russia; nor is it expected to make the Russian president the status quo is quietly accepted and that the West is left alter direction. But in the face of Putin’s intransigence, it acquiescing to Putin’s adversarial view of the world. If has become an attempt to put pressure on him from above the tendency of some Western countries towards de facto and below in the full knowledge that this might eventually appeasement were to become European policy, it would lead to his downfall. If he continues along this path, he faces only exacerbate matters. economic ruin. If he retreats, he could well face internal There are no guarantees of success, but to push back regime change. against Putin’s ambitions, the West first needs to Russia may have the greater interest in Ukraine. But acknowledge them. The inclination, for new Western the West has an even bigger interest in preserving the leaders in particular, is to give the Kremlin the benefit of post-Cold War environment. If that is dismantled, it is the doubt or attempt a Nixon-in-China-like breakthrough, conceivable that NATO and the EU could collapse too. The which continually inhibits progressive understanding of West has already paid a high price for the prevarications and learning from the relationship. The facts show that of the last five years. It has failed to track Russia’s Russia’s leadership has unleashed hackers on Estonia;169 foreign policy course in spite of its evident continuity. invaded and annexed part of Georgia; and cut off gas Unchallenged, this course will not change. But the fact to, invaded and annexed part of Ukraine. Trust has been that Russia’s foreign policy ambitions are clearer than ever lost and the Helsinki Accords are in shreds. Moscow’s suggests that the West now has an opportunity to counter word is now worth nothing, and there are no longer them and ultimately improve the situation.

168 Well expressed and explained in Vitaly Tretyakov, ‘Inflated European Union’, Rossiiskaya Gazeta, 2 June 2005 http://www.rg.ru/2005/06/02/evrosoyuz.html. 169 ‘Estonia hit by “Moscow cyber war’’’, BBC, 17 May 2007, http://news.bbc.co.uk/1/hi/world/europe/6665145.stm.

Chatham House | 39 6. Russia’s Toolkit Keir Giles

We are forced to defend our legitimate interests unilaterally.170 Plus ça change

A shock to the system Official Russian attitudes towards smaller powers in Europe have remained consistent since 1991. This is despite The annexation of Crimea in 2014 marked the second changes of leadership in the Kremlin, wild fluctuations in time in six years that Russia had used military force to Russia’s perceived and actual strength, and the brief period seize control of part of a neighbouring country. As with of optimism in relations with the West as a whole at the the example of Georgia in 2008, this provided a lively beginning of the last decade, as described in Chapter 2 by demonstration of Moscow’s willingness to resort to Roderic Lyne. The key difference in 2014 was that with the measures against its neighbours which in the 21st century assistance of a clear and consistent leadership stance, and a the rest of Europe finds unthinkable in advance and decade of high oil prices, Russia’s capabilities had developed unpalatable after the fact. to match its intentions more closely. These intentions are But states bordering Russia have long been aware that more discernible now simply because they are more likely military force was simply the most direct of a wide range of to be translated into action while that leadership feels both tools and levers Moscow employs in its neighbourhood with relatively strong and, apparently, threatened. Put another hostile intent. Both the tools of influence that were used way, Russia’s view of the outside world was not different in the early 1990s, such as energy cut-offs, and those that before the arrival in power of Vladimir Putin; ‘rather, it have become evident more recently, such as offensive cyber “hibernated” during a period of diminished pressure from activity, have been practised, developed and made more outside and weakness on the inside’.174 171 precise in their implementation. Furthermore the last In the early post-Soviet period, this view manifested itself decade has seen growing assertiveness and confidence in as an explicit aspiration to reunite the newly independent their deployment. republics in some new form.175 Throughout the 1990s, At each stage, Moscow has been encouraged by weak and senior Russians such as Yevgeny Primakov, in his various unconvincing responses from the European Union, NATO roles as intelligence chief, foreign minister and prime and the West172 – despite expert assessments predicting minister, maintained that efforts by the West to stand in the precisely this outcome.173 Finally, Russia learned from the way of reintegration of the former Soviet republics were Georgian ceasefire that in certain circumstances, use of ‘dangerous and should be reconsidered’.176 This aim was military force for foreign policy aims will be rewarded. slowly tempered, but never to the extent of challenging the implicit assumption that Russia is by right the suzerain of Seizure of Crimea and intervention in mainland Ukraine, the ‘near abroad’, and the senior partner in relations further though dramatic, should therefore not be considered afield.177 Routine confrontations with Ukraine over the in isolation. As laid out by James Nixey in Chapter 5 extent of the latter’s sovereignty were one inevitable result. on foreign policy, this does not represent any new This included discussion of the status of Crimea, despite trajectory in Russia’s attitude to its neighbours. Assertive Russian assurances that ‘Russia does not dispute the fact intervention in Ukraine was simply the latest and most that Crimea is a component part of Ukraine’.178 blatant implementation of Russia’s persistent view of international relations. Whether Russia’s motivations are Thus in the last seven years, perceived, if not actual, aggressive and imperialist, or founded in genuine notions challenges to Russian security interests have twice led of defending key Russian interests from perceived Western directly to the use of Russian military force abroad in a expansionism, is important but not the subject of this way not seen since the early 1990s. Russian intervention chapter, which reviews instead the levers and instruments in Crimea caused widespread surprise in early 2014; but – old and new – that Russia uses in relations with and this was due entirely to collective Western amnesia of a against its neighbours. kind not suffered in Moscow. The immediate aftermath of

170 Vladimir Putin, presidential address to the Federal Assembly, 4 December 2014, available at http://kremlin.ru/news/47173. 171 Jakob Hedenskog and Robert Larsson, Russian Leverage on the CIS and the Baltic States, FOI report FOI-R-2280-SE (Stockholm: Swedish Defence Research Agency (FOI), June 2007, foi.se/ReportFiles/foir_2280.pdf. 172 ‘Russia – Future Directions’, Advanced Research and Assessment Group, Defence Academy of the United Kingdom, Shrivenham, 1 October 2008, https://sakpol.files. wordpress.com/2014/03/20081001-russia_future_directions.pdf. 173 For an easily accessible example, see James Sherr, ‘Russia and the West: A Reassessment’, Shrivenham Papers No. 6, Defence Academy of the United Kingdom, 2007. 174 Norbert Eitelhuber, ‘The Russian Bear: Russian Strategic Culture and What It Implies for the West’, Connections, Winter 2009, p. 9. 175 James Sherr, Hard Diplomacy and Soft Coercion: Russia’s Influence Abroad (London: Chatham House, 2013), pp. 49–53. 176 John Goshko, ‘Yeltsin Claims Russian Sphere of Influence, Regional Peacekeeping Role Asserted’, Washington Post, 27 September 1994. 177 See, for instance, Leonid Velekhov: ‘A New “Warsaw Pact”: To Be or Not To Be?’, Segodnya, 21 September 1995, p. 9. 178 ‘Speech by A. V. Kozyrev’, Diplomaticheskiy vestnik, No. 5, May 1995, pp. 52–54.

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the Georgia war saw an abundance of informed analysis response is perceptible outside Moscow. This strategic pointing specifically to Crimea as the next target for assertive patience also applies to ambitions to adjust the post-Soviet Russian action;179 in fact this volume’s co-author wrote that: order in Russia’s surroundings. One assessment of the Georgia war in 2008 is that it demonstrates Russia’s capacity It is not surprising that most Russians still struggle with the idea that Ukraine is a foreign country. … We must assume that Russia to maintain frozen conflicts in place over a long period, until would exert itself mightily, risk a great deal and pay a high price they can be unfrozen with confidence that the result will be to prevent Ukraine from becoming, as Russians would see it, a in Russia’s favour. platform for American power.180 An obscure but indicative example of the tendency to At the time of writing, a wide range of Western observers stockpile disputes is Russia’s encouragement of Ruthenian are predicting a period of renewed weakness for Russia separatism in Ukraine’s western Zakarpattia region.182 resulting from economic pressure. Experience of previous For over a decade, this quiet campaign attracted little times of troubles shows that this should not be expected attention outside Ukraine; but its potential for leverage to lead to any lessening in Russia’s ambition to assert itself and disruption became clear as soon as Russian-backed against its front-line states; indeed one school of thought separatists at the opposite end of the country moved to holds that Moscow is at its most dangerous when weak.181 direct action. This also demonstrated the versatility of back- burner issues. Russia’s original intention in exerting malign influence may not have been to destabilize Ukraine, but was Dormant issues more likely connected with the fact that Zakarpattia is a choke point for energy pipelines from Russia to Europe. A distinctive element of the Russian approach to leverage against its neighbours is keeping disputes alive – even if in Increased Russian confidence and assertiveness make it suspended animation – for future potential use. Bilateral more likely that slow-burn or dormant issues can be revived problems that Russia’s foreign partners may long have and exploited. Thus while it is tempting to dismiss the more viewed as resolved can resurface indefinitely in Russian wild or nonsensical Russian accusations, they should still be discourse, accusations or grievances. Russia thus maintains assessed for potential justification for hostile action against passive and potential leverage through the ability to other states. reawaken disputes at any time in the future. In this respect, as in others, Russia enjoys the advantage Russian minorities of strategic patience. A 2011 private briefing by Russia’s former chief of general staff on ‘Threats to the Military A further threat that in the Russian view merits a military Security of the Russian Federation’ included a wide range response is ‘discrimination and the suppression of rights, of border disputes, including some that the rest of the world freedoms and legitimate interests of Russian Federation believes were resolved long ago. Karelia and Kaliningrad, in citizens in foreign countries’. The Russian Federal Law ‘On particular, were noted in the briefing as disputed territories, Defence’ was amended in 2009 to legitimize this kind of even though Russia’s seizure of them has been recognized intervention in Russian law, despite its highly questionable as an established fact for 70 years. But by categorizing nature in international law.183 these non-problems as military threats, Russia prepares the ground for justification for a possible military response Protection of ‘compatriots’ is a well-worn narrative to them, regardless of whether the rationale for any such in Russia’s motivations for aggressive action against

179 See, for instance, Mikhail Barabanov, ‘Ukraine, NATO and Russia’, Moscow Defense Brief No. 4, 2008; Jakob Hedenskog, ‘Crimea After the Georgian Crisis’, FOI, November 2008; Aurel Braun, ‘NATO and Russia: Post-Georgia Threat Perceptions’, Institut Français des Relations Internationales (IFRI), May 2009; Leon Aron, ‘The Georgia Watershed’, Russian Outlook, Fall 2008; Tomislava Penkova, ‘Russia’s attitude towards the post-Soviet space after the war in Georgia’, ISPI Policy Brief, Issue 111, Istituto per gli Studi di Politica Internazionale, December 2008; Steven Pifer, ‘Crisis Between Ukraine and Russia’, Council on Foreign Relations Contingency Planning Memorandum, July 2009; Col. Timo Kivinen, ‘Russia’s National Interests and Ukraine: What Policies Might Russia Adapt [sic] In Pursuing These Interests’, Royal College of Defence Studies, 2008 Course. 180 Roderic Lyne, ‘Reading Russia, Rewiring the West’, Open Democracy, 12 October 2008, https://www.opendemocracy.net/Russia/article/Reading-Russia-Rewiring- the-West. 181 As expressed, for example, in Max Fisher, ‘The worse Russia’s economy gets, the more dangerous Putin becomes’, Vox, 6 May 2015, http://www.vox. com/2014/12/17/7401681/russia-putin-ruble; or Zachary Keck, ‘Beware: Collapsing Oil Prices Could Make Russia More Dangerous’, the National Interest, 27 January 2015, http://nationalinterest.org/blog/the-buzz/beware-collapsing-oil-prices-could-make-russia-more-12132. 182 ‘Zakarpattia: Pipelines, an Oligarch and Some Separatists’, Armedpolitics.com, 24 October 2014, http://www.armedpolitics.com/131/zakarpattia-pipelines- a-oligarch-and-some-separatists/; ‘World News Research’, undated article, at http://world-news-research.com/ruthenia.html. The obscurity of this long-running campaign is underlined by its relative invisibility in mainstream sources until highlighted in The Economist, ‘Russian propaganda in Ukraine: Long live Ruthenia’, 3 April 2015, http://www.economist.com/node/21647828/print. 183 Council of Europe, ‘Opinion on the Federal Law on the Amendments to the Federal Law on Defence of the Russian Federation Adopted by the Venice Commission at its 85th Plenary Session (Venice, 17–18 December 2010)’, http://www.venice.coe.int/webforms/documents/?pdf=CDL-AD(2010)052-e.

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its neighbours, as demonstrated in both Georgia in Russia and soft power 2008 and Ukraine in 2014, as well as by the consistent pressure applied to the Baltic states over often imaginary The use of minorities abroad for political aims disadvantage suffered by Russians and Russian-speakers provides a useful illustration of the distinctive Russian there. According to international agreements subscribed understanding of ‘soft power’. This phrase is becoming to by Russia, protection of national minorities is the increasingly prominent in Russian foreign policy statements, responsibility of the host nation.184 But these agreements most notably the Foreign Policy Concept issued in February have not prevented Russia from interfering, both in cases 2013.190 An explicit foreign policy objective is to ‘increase the where there is cause for genuine concern, and in others for weight and authority’ of Russia in the world, and one way purely political purposes. This theme has been persistent of achieving this, according to the Concept, is to use ‘soft throughout the post-Soviet period; even Russia’s first foreign power’ as a complement to traditional diplomacy. minister, the relatively liberal and Western-oriented Andrey Kozyrev, threatened the use of ‘direct armed force’ against Equating Russian and Western perceptions neighbouring countries to protect Russian minorities.185 of soft power is to misunderstand Russian Russians abroad provide Moscow with a tool of direct intentions. Russia has adopted the phrase, influence even when they are not used as an excuse but applied it to an entirely different set for military intervention. According to an Estonian assessment, Russia seeks: of ideas.

to organise and coordinate the Russian diaspora living in foreign But equating Russian and Western perceptions of soft countries to support the objectives and interests of Russian foreign power is to misunderstand Russian intentions. Russia has policy under the direction of Russian departments. The compatriot policy aims to influence decisions taken in the host countries, by adopted the phrase, but applied it to an entirely different 191 guiding the Russian-speaking population, and by using influence set of ideas. As classically understood in the Euro-Atlantic operations inherited from the KGB.186 community, soft power deals not with the actual wielding of power or influence by an actor but with the power of Russian Foreign Minister Sergei Lavrov is outspoken on the attraction. But, as Lavrov’s quid pro quo indicates, Russian intent to exploit Russians living abroad to further Moscow’s minorities are expected to serve as a tool to influence or political aims: destabilize the host nation in return.192 Russia’s approach to It is very important that in Russia’s relations with its diasporas, its neighbours is incompatible with the application of soft there is movement in both directions. Russia provides the diasporas power as it is normally understood in the West. As put by a with support, primarily assisting them in consolidating, and the 2007 study on Russian influence on its neighbours, ‘Russia diasporas strive to act in the interests of Russia. … The diasporas is primarily successful when influence is bought, taken or are a powerful resource for us, and they need to be used to their greatest power.187 stems from dependence. There are, however, no successful positive forces of attraction.’193 Russia is not the only country that seeks to exploit the role of diasporas for political ends, but in a European context it is The conceptual disconnect is exacerbated by the difficulty hard to find other examples where the aim is overtly hostile of translating the phrase in either direction. The Russian to the host nation. Furthermore, while discussion of Russian phrase used for soft power is myagkaya sila, which carries minorities often focuses on the three Baltic states,188 Russia’s a meaning much closer to soft force, while explaining the ‘compatriots policy’ also applies to countries far removed from Western notion of soft power in Russian requires much more Russia. According to some estimates, there are more Russians complex and long-winded phrases. For Russia, therefore, living in Greater London than there are in Lithuania.189 the concept translated here into English as ‘soft power’ includes direct coercion or destabilization by means that

184 As, for example, with ‘The Bolzano/Bozen Recommendations on National Minorities in Inter-State Relations’ (Vienna: Organization for Security and Co-operation in Europe), 2 October 2008, http://www.osce.org/hcnm/33633. 185 Marina Pavlova-Silvanskaya, ‘Four Steps Forward and One Step Back’, Novoye Vremya, 1 April 1995, pp. 9–11. 186 Estonian Internal Security Service Annual Review 2013, https://www.kapo.ee/cms-data/_text/138/124/files/kapo-annual-review-2013-eng.pdf. 187 Interview with Russian Foreign Minister Sergei Lavrov for Pomni Rossiyu website aimed at Russians abroad, http://www.pomnirossiu.ru/about/obrashenie- lavrov/index.htm. 188 Mike Winnerstig (ed.), ‘Tools of Destabilization: Russian Soft Power and Non-military Influence in the Baltic States’, FOI report No. FOI-R--3990--SE, December 2014. 189 Caroline Binham and Helen Warrell, ‘Rich Russians head for UK in record numbers’, Financial Times, 21 December 2014; ‘300,000 Russians in the UK, “Londongrad” a prime location’, Workpermit.com, 19 December 2006, http://www.workpermit.com/news/2006_12_19/uk/russians_londongrad.htm. 190 Concept of the Foreign Policy of the Russian Federation, http://www.mid.ru/brp_4.nsf/0/76389FEC168189ED44257B2E0039B16D. 191 Yelena Osipova, ‘“Russification” of “Soft Power”: Transformation of a Concept’, Exchange Journal of Public Diplomacy, Vol. 5, Fall 2014. 192 Greg Simons, ‘Perception of Russia’s soft power and influence in the Baltic States’, Public Relations Review (2014), http://www.sciencedirect.com/science/article/ pii/S0363811114001623. 193 Hedenskog and Larsson, Russian Leverage on the CIS and the Baltic States.

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are not hard, i.e. short of direct military intervention.194 Even more alarming messaging comes in the form of new So when we encounter references to soft power in Russian emphasis on the potential for use of nuclear weapons in statements, rather than being encouraged we should bear in statements by President Putin and other officials.198 In mind the whole range of economic, energy, cyber and other addition to the distinctive role strategic nuclear weapons hostile tools at Russia’s disposal. play in Russian national identity,199 use of both strategic and tactical nuclear weapons is now presented within Russia’s soft power can thus also be taken to include hostile Russia ‘as a realistic possibility and even something to be messaging and intimidation. In early September 2014, US embraced’.200 This gives rise to a dangerous mismatch of the President Barack Obama provided explicit encouragement unthinkable.201 Soviet offensive plans for Europe included to the Baltic states with a strongly worded public speech in early use of tactical nuclear weapons,202 and they still play a Tallinn.195 Russian hostile actions against all three countries significant – but not publicly acknowledged – role in Russian followed over the subsequent month. An Estonian counter- doctrine. The experience of Crimea shows that just because intelligence officer was abducted across the border and put something is unimaginable for Western planners does not on show trial in Moscow; a senior Russian official speaking mean it is not considered a viable option by Russia. in Riga accused the Latvian authorities of promoting fascism and human rights violations against Russian-speaking minorities; Russian authorities reopened criminal cases Energy against over 1,000 Lithuanians who had refused military service in the Soviet army in 1990; and a Lithuanian fishing Exploitation of energy dependency for political ends is one vessel was seized in international waters and taken in tow of Russia’s more traditional, and best publicized, forms to the Russian port city of Murmansk. All four incidents of leverage on its neighbours. The boundaries between were widely interpreted as a direct response to the Tallinn commercial dispute and political interference can on speech, intended to show that Obama’s assurances were occasion be hard to divine. But in other cases, interruptions hollow and Russia still held sway in the region. – or threats of interruption – in the supply of oil, gas or Russia’s demonstrations of military strength throughout electricity are not linked with coercive negotiations, but 2014 could also, perversely, be classified under this definition instead result from suspicious sabotage or unspecified of soft power. Greatly intensified air activity combines with ‘damage’ to pipelines, with results which favour Russian simulated attack runs by bombers and submarine incursions state or business interests.203 to send intimidatory messages to countries outside Russia’s Recurrent gas disputes with Ukraine since the mid-2000s direct reach by land.196 Even without an overtly hostile have been the most highly publicized examples of energy flight profile, for Russian military aircraft to pass through supply interruptions, but this obscures the fact that energy controlled airspace with no flight plan filed, no transponder pressure is also applied to more responsible customers active, and no communications with appropriate controllers who pay promptly for Russian oil, gas and electricity. Nor is unnecessarily dangerous and irresponsible – as incidents is this a new phenomenon: between 1991 and 2004 Russia including two airmisses with Swedish airliners and disruption instigated over 40 politically motivated gas and oil cut-offs to civil traffic off Ireland have already demonstrated.197 against its neighbours.204

194 For a detailed examination of how the Russian concept of soft power includes what other states define as hostile influence operations, see Estonian Internal Security Service Annual Review 2012, https://www.kapo.ee/cms-data/_text/138/124/files/kapo-aastaraamat-2012-en.pdf. 195 ‘Remarks by President Obama to the People of Estonia’, White House website, 3 September 2014, http://www.whitehouse.gov/the-press-office/2014/09/03/ remarks-president-obama-people-estonia. 196 See, for example, ‘Sweden intercepts Russian planes over Baltic amid regional tensions’, Reuters, 24 March 2015. 197 Richard Milne, ‘Scandinavians warn Russia after air near-miss’, Financial Times, 15 December 2014. ‘Simon Coveney is NOT happy about Russian war planes flying close to Ireland’, TheJournal.ie, 24 March 2015, http://www.thejournal.ie/russian-planes-irish-airspace-2010461-Mar2015/. 198 Tom Nichols, ‘If Putin goes nuclear’, The War Room, 1 September 2014, http://tomnichols.net/blog/2014/09/01/if-putin-goes-nuclear/. 199 Tom Parfitt, ‘Ukraine Crisis: Putin’s Nuclear Threats are a Struggle for Pride and Status’, Daily Telegraph, 29 August 2014, http://www.telegraph.co.uk/news/ worldnews/europe/russia/11064978/Ukraine-crisis-Putins-nuclear-threats-are-a-struggle-for-pride-and-status.html. For a more detailed examination of this phenomenon, see also Keir Giles and Andrew Monaghan, ‘European Missile Defense and Russia’, US Army War College Strategic Studies Institute, July 2014, http://www.strategicstudiesinstitute.army.mil/pubs/display.cfm?pubID=1219. 200 Stephen Ennis, ‘Russian media learn to love the bomb’, BBC News, 23 February 2015, http://www.bbc.co.uk/news/world-europe-31557254. 201 Alexander Golts, ‘Russia’s Nuclear Euphoria Ignores Reality’, Moscow Times, 6 October 2014, http://www.themoscowtimes.com/opinion/article/russia-s-nuclear- euphoria-ignores-reality/508499.html. 202 Interview with Col-Gen Matvey Burlakov, Kommersant-Vlast, 29 March 2005, http://www.kommersant.ru/doc/558042. See also Jan Hoffenaar and Christopher Findlay (eds), ‘Military Planning For European Theatre Conflict During The Cold War: An Oral History Roundtable, Stockholm, 24–25 April 2006’, Center for Security Studies, ETH Zurich. 203 As, for example, with Lithuania’s Druzhba pipeline at the time of negotiations over the sale of the Mažeikiai oil refinery. ‘Russia won’t re-open oil pipeline, Lithuania says’, Reuters, 11 October 2007, http://uk.reuters.com/article/2007/10/11/lithuania-russia-oil-idUKL1159854520071011. 204 Robert Larsson, Russia’s Energy Policy: Security Dimensions and Russia’s Reliability as an Energy Supplier, FOI, http://www.foi.se/ReportFiles/foir_1934.pdf.

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The enormous investment undertaken by Russia in states that had come to rely on the Russian market were commercially unjustifiable projects such as the Nordstream severe. Surplus Polish apples became a symbol of standing pipeline underscores the importance to Russia of energy up to Russia, while in the Nordic states, ‘Putin cheese’ as a tool of influence in the last decade. More recent (labelled for export to Russia) flooded supermarkets at developments in international energy markets, and moves dumping prices as producers tried urgently to shift banned to reduce European dependence, may dilute the power of dairy products to alternative markets. The overall effect Russia’s energy lever in the long term.205 This requires the was to remind those countries that had come to take well- kind of sustained investment and political will that has been developed trade links with Russia for granted that, as put by seen in the Baltic states, where 100 per cent dependence Lithuanian President Dalia Grybauskaitė, Russia is ‘a totally on Gazprom for gas supplies and prices created a sustained untrustworthy and unpredictable business partner’.209 vulnerability. Pipeline gas contracts provide Russia with Other economic instruments routinely feature in Russian greater leverage than do oil supplies in the more flexible pressure on its neighbours. Russia seeks to establish or oil market. In October 2014, Lithuania opened a liquefied reassert dependencies by the creation and usage of debts, natural gas (LNG) terminal to reduce its exposure to and a related creeping control of key infrastructure. The Russian energy pressure.206 exact amount and type of Russian investment can be difficult to assess because of the routine use by Russian Economy and trade businesses of third countries and other jurisdictions to channel investments, concealing their origin from normal economic analysis.210 As with energy disputes, much of the Price and trade dependency provide further means by scale, composition and timing of Russian foreign direct which Russia can persuade or punish its neighbours. investment used as leverage can also be accounted for by Boycotts and embargoes on their key exports have normal commercial drivers. But the net effect in terms of repeatedly been employed to inflict economic damage, often a lever that Russia can exploit is similar.211 using entirely spurious health or environmental concerns as a pretext for banning imports of foodstuffs to Russia. Georgian wine and mineral water, and Baltic and Belarusian Purchasing influence dairy products have been repeated targets for bans. But almost 25 years after the end of the Soviet Union, well- Russia’s ability to purchase or co-opt business and established trading relations beyond the Soviet republics political elites into loyal, or at least compliant, networks have created a range of new vulnerabilities. Despite optimism is a primary tool for garnering influence. Both bribes at the time, Russia joining the World Trade Organization in and business opportunities are used to recruit agents 2012 did little to constrain its misuse of health regulations;207 of influence throughout target countries. This leads to instead, Russia openly admits within WTO meetings that direct impacts on political processes through Trojan horse some bans on food imports are politically motivated.208 individuals or organizations.212 A 2008 study warned that the UK ‘should be wary of placing reliance on EU or NATO Russia’s August 2014 ban on imports of foodstuffs from a solidarity, or on national leaders or key figures to act in range of countries was widely viewed as a perverse move what would appear to be their own national interests’, and that would further punish Russians themselves to no suggested, ‘it is urgent that we now look more closely at positive effect. But the implications for central European this activity at home’.213

205 ‘Conscious uncoupling: reducing Europe’s dependence on Russian gas is possible – but it will take time, money and sustained political will’, The Economist, 5 April 2014. 206 ‘Baltic leaders welcome Lithuania’s “Independence” as energy security guarantee for all region’, Baltic News Service (BNS), 27 October 2014, http://en.delfi.lt/ lithuania/energy/baltic-leaders-welcome-lithuanias-independence-as-energy-security-guarantee-for-all-region.d?id=66232218. 207 ‘How Russia’s Membership in the World Trade Organization Improves Sanitary and Phytosanitary Measures and How They Are Applied in the Russian Federation’, Office of the US Trade Representative, undated document, https://www.ustr.gov/sites/default/files/How%20Russia%20WTO%20Membership%20Improves%20 SPS%20Measures%20and%20How%20They%20are%20Applied%20in%20Russia.pdf. 208 World Trade Organization, ‘Russia contributes to sanitary-phytosanitary committee, but also attracts concerns’, 17 October 2014, http://www.wto.org/english/ news_e/news14_e/sps_15oct14_e.htm. 209 ‘Eat apples to annoy Putin’, Eastern Approaches blog, The Economist, 29 August 2014, http://www.economist.com/blogs/easternapproaches/2014/08/poland- and-russia. 210 Agnia Grigas, Legacies, Coercion and Soft Power: Russian Influence in the Baltic States, Chatham House Briefing Paper, August 2012. 211 Philip Hanson, ‘Russia’s Inward and Outward Foreign Direct Investment: Insights into the Economy’, Eurasian Geography and Economics, Vol. 51, No. 5, 2010, pp. 632–53. See also forthcoming article by Philip Hanson and Stephen Fortescue, ‘What Drives Russian Outward Foreign Direct Investment? Some Observations on the Steel Industry’, Post-Communist Economies, Vol. 27, No. 3, September 2015. 212 A topic explored in detail in Janusz Bugajski, ‘Georgian Lessons: Conflicting Russian and Western Interests in the Wider Europe’, CSIS, 2010, http://csis.org/files/ publication/102110_Bugajski_GeorgianLessons.WEB.pdf. 213 Defence Academy of the United Kingdom, ‘Russia – Future Directions’.

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Interference in domestic political systems is increasingly This reflects the holistic nature of the Russian information reflected in financial and other support for political parties warfare approach, where cyber activity is not a separate abroad. Unlike in Soviet times, Russia is no longer restricted discipline but is included implicitly in a much wider range by ideology in its choice of foreign friends, and one notable of tools to affect ‘information space’. This includes not only result is a surge in links with right-wing and anti-EU parties, information technology but also the cognitive domain – whose agendas fall in line with Russian state objectives.214 a point explored in more detail below. Organized political influence can suborn policy-making; In addition, the ongoing use of less visible cyber espionage however, as during the communist era, Russia need not forms a crucial part of positioning for Russia’s foreign policy always spend money on purchasing this influence but can with regard both to its neighbours and to adversaries further also obtain it as a free good. The attraction of communism afield. Accessing the information systems of diplomatic, as an ideal is being replaced by the attraction of Putin government and military organizations over many years gives as a strong leader with a distinctive ideological stance, Russia a key advantage in predicting the tactics and thinking resistant to ‘liberal extremism’ and ‘Hollywood values’.215 of its smaller neighbours, and thus provides an additional This perception of strength with its own distinctive appeal degree of asymmetry. Again, Russia is not unique in seeking is reinforced by Putin’s personal, and Russia’s collective, an intelligence advantage by cyber means; but again, it is the martial posturing.216 use to which this advantage may be put that makes Russia exceptional in Europe. The intelligence insights gathered in this way may be enough to tip the balance in a risk equation ‘Cyber attack’ which results in overtly hostile Russian activity like that displayed in Crimea and Ukraine. In the early stages of Russia’s intervention in Ukraine, an apparent lack of cyber activity caused comment and speculation. Some expected a repeat of the crude cyber What was new in Crimea? campaigns that accompanied Russian pressure on Estonia in 2007, Georgia in 2008 or Kyrgyzstan in 2009. But not only Russia’s most recent actions in Ukraine are thus rooted in are indiscriminate cyber broadsides inappropriate for the decades of applying instruments of coercion, persuasion or specific circumstances of Ukraine; in the intervening seven punishment against its neighbours, and making use of new years the cyber threat landscape – as well as the capabilities tools and opportunities as they arise. But their origins lie in to counter threats – has evolved beyond recognition. Russia even longer-established Russian principles and assumptions is now in a position to make full use of sophisticated cyber about the nature of international relations. As James Sherr tools with no need for the crude and low-tech ‘cyber carpet has observed: bombing’ seen in Estonia.217 Today’s Russian state has inherited a culture of influence deriving from the Soviet and Tsarist past. It bears the imprint of doctrines, Russia is not unique in seeking an disciplines and habits acquired over a considerable period of time intelligence advantage by cyber means; but it in relations with subjects, clients and independent states. The problems that bedevil present-day relations between the West and is the use to which this advantage may be put Russia are not simply the product of ‘Cold War mindsets’.219 which makes Russia exceptional in Europe. Even the seizure of a neighbour’s territory by military force was not new, despite being repeatedly presented as such Cyber actions visible in Crimea and Ukraine have been in both media and expert commentary. Long-term Russia facilitators for broader information operations. Interference observers were startled at how swiftly Russian operations with internet infrastructure has been linked directly to in the armed conflict in Georgia had been forgotten. And influencing decision-making – whether by Ukrainian Rada there is no shortage of earlier precedents for the use of deputies, the National Defence and Security Council218 or Russian special forces for coup de main operations, seizing the entire population of Crimea immediately before the key points to facilitate regime change, or presenting facts referendum on ‘independence’.

214 Andrew Rettman, ‘Reports multiply of Kremlin links to anti-EU parties’, EUObserver, 26 November 2014, https://euobserver.com/foreign/126676. 215 Greg Simons, ‘Putin’s International Supporters’, UIBrief No. 3, 2014, Swedish Institute of International Affairs, Stockholm. 216 A Twitter search for #putinmania is enough to make the point beyond doubt. 217 ‘Capacités de lutte informatique russes : état des lieux’, in Observatoire du Monde Cybernétique, Délégation aux Affaires Stratégiques, French Ministry of Defence, March 2014. 218 ‘With Russia and Ukraine, is all really quiet on the cyber front?’, Ars Technica, 11 March 2014, http://arstechnica.com/tech-policy/2014/03/with-russia-and- ukraine-is-all-really-quiet-on-the-cyber-front/. 219 Sherr, Hard Diplomacy and Soft Coercion.

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on the ground without an overt declaration of war. To selected elements of elite special forces units, which claim that this is a new phenomenon is to ignore the use were in no way representative of the capabilities of of Russian special and airborne forces in Prague in 1968, the broad mass of Russia’s ground troops. Instead they Kabul in 1979, or Pristina in 1999. This long-standing were drawn from the special forces of the Southern tradition is one of the explicit purposes of special forces Military District, the VDV and marine infantry,225 all of units and the Airborne Assault Troops (VDV), just as it was which have consistently been given priority for funding during Soviet times.220 In fact Russia’s plan for the seizure and equipment.226 of Grozny during the first federal intervention in Chechnya At the same time, comparing the Russian military capability in 1994 was similar to its actions in Simferopol in 2014. The provided by the troops and equipment on display in Crimea Grozny operation failed so spectacularly because Russia’s with that shown along the Ukrainian border provides a disorganized and debilitated army was still 20 years away snapshot of how far Russia has come in creating a military from the necessary levels of capability and training. fit for 21st-century warfare as envisaged in Moscow. The The current excitement over Russia’s use of ‘hybrid’, military overhaul remains a work in progress.227 But the ‘ambiguous’ or ‘non-linear’ warfare derives from the way Crimea operation demonstrated that Russia is already in which the military effort in Crimea was integrated with willing to use the most capable parts of its military while other instruments, rather than resulting from a radical the main force is still developing. change in how Russia uses its military.221 As explained by In the meantime, Russia’s ground troops can provide the Kristin Ven Bruusgaard: illusion of a more capable force simply by mobilizing. although Russia demonstrated new principles of warfighting in Throughout most of 2014, the force deployed close to the Crimea, most of the tactics and doctrine displayed represented Ukrainian border served as a distraction from actual Russian traditional Russian (or Soviet) warfighting principles refitted operations within Ukraine. The Russian ground forces’ for modern war. … [But] Russia integrated military tools with movement to and from the border kept Western governments other tools of pressure in innovative ways, and made use of a seamless transition from peace to conflict.222 and intelligence agencies in a perpetual state of speculation on the likelihood of a full-scale invasion. In this case, the It is managing this transition, and the related discipline actual capability of those troops was irrelevant. of escalation control, that is a key element of the overall campaign within which Russia places use of the military But Russia’s military capability is continuing to improve – and reflects some of the conclusions drawn in the much- rapidly. The outlook for Russia’s armed forces is more quoted February 2013 presentation by Russian Chief of of the same: continued generous investment (despite General Staff Valeriy Gerasimov.223 The result in Crimea Russia’s economic challenges), with the aim of reducing was a specific combination of two long-standing but the capability gap with potential adversaries, especially reinvigorated instruments of this power: the armed forces the United States. and the capacity for intensive information warfare.224 Information warfare The military option Examining Russian assessments of current events makes it The Russian military capabilities demonstrated in clear that Russia considers itself to be engaged in full-scale Crimea in early 2014 are the product of an intense and information warfare. This is reflected in the new emphasis costly process of transformation and rearmament since on information warfare in Russia’s latest Military Doctrine, 2008. But the perception of advanced military capability approved on 26 December 2014 – although naturally most is also misleading: the Crimea operation made use of of the concepts that are recognizable from Russian offensive

220 Department of the Army [USA] Field Manual 100-2-2, ‘The Soviet Army: Specialized Warfare and Rear Area Support’, 1984, p. 5–3. 221 Stephen J. Cimbala, ‘Sun Tzu and Salami Tactics? Vladimir Putin and Military Persuasion in Ukraine, 21 February–18 March 2014’, Journal of Slavic Military Studies, Vol. 27, Issue 3, 2014. 222 Kristin Ven Bruusgaard, ‘Crimea and Russia’s Strategic Overhaul’, Parameters, Vol. 44 No. 3, Autumn 2014. 223 Valeriy Gerasimov, ‘Tsennost nauki v predvidenii’ [The value of science lies in foresight], Voyenno-Promyshlennyy Kuryer, 27 February 2013, http://www.vpk-news. ru/articles/14632. 224 These two topics are to be examined in greater detail in a forthcoming Chatham House research paper: Keir Giles, Russia’s New Tools for Confronting the West. 225 For a detailed evaluation, see Niklas Granholm, Johannes Malminen and Gudrun Persson (eds), A Rude Awakening. Ramifications of Russian Aggression Towards Ukraine, FOI, June 2014. 226 Anton Lavrov, ‘Nachalo reformy Vozdushno-desantnykh voysk’ [Beginning of reform of the Airborne Assault Forces], in Mikhail Barabanov (ed.), Novaya armiya Rossii (Moscow: CAST, 2010). 227 See ‘Brothers Armed’, a survey of the Russian and Ukrainian militaries published in late 2014 by the CAST defence consultancy in Moscow.

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action in and around Ukraine appear described in purely of journalists and ordinary citizens – as well as Russian defensive terms of countering threats to Russia itself.228 servicemen themselves – to reach a wide audience directly with information undermining or contradicting the official The current Russian practice of information warfare Russian position poses the single greatest challenge to combines a number of tried and tested tools of influence Russian information campaigns. The result is a range of with a new embrace of modern technology and capabilities, recent suppressive measures targeting social media within primarily the internet. Some underlying objectives Russia in attempts to control this last unregulated subset of and guiding principles are broadly recognizable as Russia’s ‘national information space’. reinvigorated aspects of subversion campaigns from the Cold War era and earlier.229 But Russia has invested hugely Alternative realities have also been presented to in adapting principles of subversion to the internet age. audiences outside Russia, where liberal societies and free These new investments cover three main areas: internally media provide vulnerabilities ready for exploitation by and externally focused media with a substantial online a coordinated information warfare onslaught. Western presence, of which RT (formerly Russia Today) is the societies put faith in their own independent media to best known but only one example; use of social media arrive at and report the truth thanks to their relative and online discussion boards and comment pages as a freedom. But Western liberal media training proved force multiplier to ensure Russian narratives achieve initially to be no match for the unity of message emanating broad reach and penetration; and language skills, in from Russia. In fact, the opposite is true: the emphasis order to engage with target audiences on a wide front in on ‘balance’ in many Western media ensures that Russian their own language.230 The result is the dominant online narratives, no matter how patently fraudulent, are presence now known as the Kremlin troll army, acting in repeated to European and American audiences by their coordination with state-backed media. own media. Individual journalists were entirely capable of perceiving and deconstructing Russian disinformation; Western media organizations were entirely unprepared for but when Western news editors were presented with a a targeted and consistent hostile disinformation campaign consistent version of events being repeated by all levels organized and resourced at state level. The result was an of the Russian media machine from the president to the initial startling success for the Russian approach in the lowliest foot soldier in the Kremlin troll army, they had early stages of operations in Crimea, where reports from little choice but to report it, thereby lending that version journalists on the ground identifying Russian troops did weight and authority. not reach mainstream audiences because editors in their newsrooms were baffled by inexplicable Russian denials. Both of these aspects of the Russian disinformation campaign illustrate a key reason why its success or failure Months later, Western media outlets were still faithfully should not be judged by criteria other than those set reporting Russian disinformation as fact, but the realization in Moscow. The assessment that Russia is failing in its that they had been subjected to a concerted campaign objectives often rests on the implausibility of Russian of subversion was beginning to filter into reporting. One narratives, and the consequent assumption that they will be assessment of this change is that Russian information rejected by their audiences. But while truth is supposed to campaigns are failing. By Western criteria, this may be true; be a fundamental requirement of Western communications to an informed observer, they often appear clumsy, counter- strategies, Russian campaigns need not even remotely productive, obvious and easily debunked. But measured resemble the truth to be successful. instead against Russian objectives, the information offensive has made substantial achievements. This is particularly A key example of this approach followed the downing of the case in two key areas: controlling the domestic Russian Malaysia Airlines Flight MH17. Four days after the crash, media environment, and sowing doubt in Western media by which time it was already clear that Russia held ultimate reporting (including influencing information available to responsibility for the tragedy, the Russian Ministry of policy-makers). Defence held a press conference to present explanations absolving Russia.231 The scenarios presented were diverse The exception that proves the rule is online social media. As and mutually contradictory, and did not stand up to the has been demonstrated repeatedly throughout the seizure briefest examination by experts with even basic knowledge of Crimea and operations in eastern Ukraine, the ability

228 ‘Military Doctrine of the Russian Federation’, http://news.kremlin.ru/media/events/files/41d527556bec8deb3530.pdf. 229 Victor Madeira, ‘Haven’t We Been Here Before?’, Institute of Statecraft, 30 July 2014, http://www.statecraft.org.uk/research/russian-subversion-havent-we-been-here. 230 As reflected, for instance, in complaints over lack of language capacity to influence non-Russian-speaking audiences in the Baltic states. See ‘Informatsionnie voiny s samimi soboi’ [Information wars with ourselves], Postimees-DZD, 7 November 2011, http://rus.postimees.ee/624820/informacionnye-vojny-s-samimi-soboj. 231 ‘Special Briefing by the Ministry of Defence of the Russian Federation on the crash of the Malaysian Boeing 777 in the Ukrainian air space, July 21, 2014’, Russian Ministry of Foreign Affairs website, http://www.mid.ru/brp_4.nsf/0/ECD62987D4816CA344257D1D00251C76.

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of the aircraft and missile systems claimed to have been in previous conflicts, but also forcing through leadership involved.232 But this was not a Russian concern: their decisions despite administrative obstacles.233 The new instant rejection by both foreign and Russian experts did Russian way of warfare, and in particular the blurred lines not prevent them being reported in the West as well as between peace and war that are a defining factor of hybrid receiving broad coverage within Russia. war, demand a whole-of-government approach from Russia (as well as whole-of-government responses from any states Danger arises when successful pollution by Russia of wishing to resist Russia). It has long been recognized that the opinion-forming process in the West spills over into management of the information aspects of campaigns in influence on the policy-making process. There is a wide particular requires ‘a well-developed mechanism of state range of views on the causes of and factors in the Ukraine control over information policy and processes’.234 conflict, and how best it can be resolved; but many narratives exonerating Russia or seeking a swift solution The new National Defence Control Centre in Moscow is at Ukraine’s expense will find willing audiences in those intended to facilitate this coordinated approach. At the time policy circles that wish to appease Russia and return to of writing (late 2014), the centre appeared more a symptom business as usual at the earliest opportunity, as was the and a symbol of the new approach rather than a distinctive case following the armed conflict in Georgia in 2008. Even new capability.235 But by combining a total of 49 military, more dangerously, in circumstances requiring complete police, economic, infrastructure and other authorities under Western unity – such as a decision on collective action to be the stewardship of the General Staff, the centre could, if taken by NATO – Russian information warfare could play implemented as planned, greatly improve Russia’s speed a key role by exploiting the already existing differences of reaction and information exchange, and assist in honing of opinion among NATO allies in order to prevent the Russia’s coordinated capabilities for future hostile action. essential consensus from being achieved.

The danger of these information campaigns lies in Outlook preparation for future Russian action directly countering the interests of the West, particularly Europe. By either We are guided by interests rather than feelings in dealing with undermining the will or support for deterrent measures, or our partners.236 creating an entirely false impression that Russia is justified in its actions, Russia adjusts key variables in the security Current trajectories indicate that further confrontation 237 calculus, reducing the risk inherent in any future assertive between Russia and the West is inevitable. It is therefore action against its neighbours. In the case of Ukraine, Russia essential to understand the full range of tools at Russia’s felt the balance was tipped sufficiently in its favour to act; disposal to achieve its aims. Russia’s intentions remain but Ukraine, and Georgia before it, are unlikely to be the persistent over time; but its capabilities, especially in the last neighbours of Russia to fall victim to this calculation. military domain, are developing rapidly, emboldening Current Russian ambitions, if followed to their conclusion, Moscow to become still more aggressive in achieving its must necessarily lead to a more direct confrontation with foreign policy goals. the West. Russia now benefits from a highly developed The current plans for military transformation, like many information warfare arsenal, which will be a key other Russian strategic planning horizons, set a completion facilitator in preparing for further actions. date of 2020. If Russia continues to invest heavily while Western militaries contract, defence capability trajectories will eventually cross and Russia will eventually achieve its The National Defence Control Centre goal of once more overmatching European military power, by means of qualitative improvements capitalizing on the Linking and consolidating the modern tools available to the already existing huge quantitative superiority. Russian leadership, such as information operations, modern military forces and other levers of influence, also requires But Crimea demonstrated that Russia does not have to new capabilities: not only coordination between arms of wait until its military transformation is complete to use the Russian state, which had been noticeably deficient military force successfully. This is due to two key force

232 Keir Giles, ‘Tales from Two Cities: Moscow and Washington on Flight MH17’, Chatham House Expert Comment, 24 July 2014, http://www.chathamhouse.org/ expert/comment/15236. 233 Andrew Monaghan, Defibrillating the Vertikal? Putin and Russian Grand Strategy, Chatham House Research Paper, October 2014, http://www.chathamhouse.org/ publication/defibrillating-vertikal-putin-and-russian-grand-strategy. 234 Maj-Gen V.A. Zolotarev (ed.), ‘Rossiya (SSSR) v lokalnykh voynakh i voyennykh konfliktakh vtoroy poloviny XX veka’ (Moscow: Kuchkovo Pole, 2000). 235 Julian Cooper, ‘The National Defence Management Centre of the Russian Federation. A Research Note’, unpublished article, 18 November 2014. 236 Vladimir Putin, speaking ahead of November 2014 G20 summit, http://itar-tass.com/en/russia/759665. 237 See James Sherr, ‘Reflections on the New East-West Discord’, unpublished article, 20 December 2014.

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multipliers: first, Russia’s political will to resort to force economic and reputational pain. As noted elsewhere in when necessary, entirely absent in Europe; and second, this report, economic upsets have disrupted the application the successful integration of other strategic tools such as of this calculus to operations in Ukraine. But they have done information warfare, reflecting the new doctrinal emphasis little to dispel the euphoria resulting from the successful on influence rather than destruction. seizure of Crimea – or the impression that bold military strokes, if designed not to trouble NATO members with The text of Russia’s new Military Doctrine shows that in consideration of an Article 5 response, are unlikely to meet declaratory policy at least, Moscow’s threat perception has with significant resistance or challenge. Russia’s neighbours not substantially changed. Russia might feel after the Wales should therefore be alert to the possibility of more summit that its preconceived notions of NATO as a threat substantial military interventions as the parts of the armed may be a little more realistic and not simply hypothetical, but forces which are considered ready and fit for use expand.238 in the Doctrine NATO remains just a ‘military risk’ as opposed to a threat. The distinction in Russian doctrinal lexicon is The distinctive Russian understanding of ‘soft power’ is significant; and it makes an important political statement, linked to the fact that one of Russia’s fundamental demands with NATO and its members the intended audience. from the rest of the world is respect. But so little of what Russia does earns it respect anywhere except at home. This But the emphasis in the Military Doctrine on regime paradox cannot be resolved, because to do so would involve change both on Russia’s borders and internally, and breaking the traditional Russian equation of respect with on information war, is new. Russia has brought limited fear – an equation that continues to be clear in Putin’s public intervention and information warfare back into its arsenal for statements. As a result, Russia’s neighbours will continue to bringing recalcitrant neighbours to heel – or replacing their face an increasingly assertive Russia. Whether emboldened governments with ones more amenable to Russia’s aims. by success in Ukraine, or embittered by failure, Russia will The results of the Georgia war in 2008 validated military continue to be difficult and can be expected to employ its force as a foreign policy tool for Russia, bringing long-term full range of both soft and hard power tools to do so. strategic gains in exchange for short-term and limited

238 Keir Giles and Aleksandr V. Rogovoy, ‘A Russian View on Land Power’, US Army War College Strategic Studies Institute, April 2015, http://www.strategicstudiesinstitute.army.mil/pubs/display.cfm?pubID=1258.

Chatham House | 49 7. Russian and Western Expectations Andrew Wood

The problem establishment preferred the apparently safer option of centrally directed economic policies and increased control President Vladimir Putin’s third term in the Kremlin has over Russia’s people.240 been a disaster for Russia, and therefore for the wider 239 world. The Russian public is for now largely behind Clampdown him, but uncertain of what the future, even the immediate future, may bring. The repression of protest and criticism, both actual and potential, was, however, both swifter and more extensive Western leaders are still divided in their understanding after Putin’s inauguration than most had expected. It has of how best to relate to Russia. That is in part because as worked in the sense that it has cowed overt opposition. a term ‘the West’, while remaining a convenient and often It has also been corrosive. Its cumulative effect has been relevant shorthand, now covers a looser set of organizations to inhibit internal debate and therefore informed policy- and interests than in the past. Present divisions in the West making. The need for that has become increasingly evident also reflect differing understandings of the way in which as Russia’s economic and civil development and foreign Russia has evolved, particularly over the last three years or policy options have become constrained. As set out in so. The previous assumption in North America and most Chapter 3 by Philip Hanson, Russia’s economic prospects of Europe was that Russia could somehow be encouraged were darkening as Putin’s third term began; the possibility back towards a gradual transition favouring a sustainable of GDP growth of around 5 per cent a year needed to relationship with the rest of the world, and Europe in finance the mandate he had demanded of the government particular, together with the law-based relationship looked well beyond the country’s reach. The idea that between the Russian leadership and people that would Russia needed a new development model to replace that underpin such a desirable outcome. That hope has taken a fuelled by high energy and other natural resource prices beating, particularly over the past year and a half, but there plus underutilized inherited assets, which had made for are still those who ask themselves whether, for instance, such success until 2008, was widespread, but not elaborated Moscow has been failed by the West and thereby in some by the government. The statist alternative insisted on by the fashion provoked into aggression against its neighbours. Kremlin has failed to deliver. If so, what should be done to correct that fault? Or do Russia and the West now face far worse prospects, such as All governments need to convey a sense of national a further slide towards a belligerent nationalist dictatorship purpose or mission, but authoritarian governments in Moscow or eventual collapse into chaos in Russia and organized around an iconic figure like Putin ruling over a its neighbourhood? disoriented country like Russia have a special need to do so. By 2013 the Kremlin had tried a number of expedients without making sufficient impact to prevent Putin’s poll Putin’s third term ratings sliding. Russians were not seriously investing in their country. The National Front was a nostrum in The principal determinant of events since Putin’s return search of a purpose. Presenting Russia as the defender to the Kremlin in May 2012 has been Russia’s internal of conservative paradigms had a certain appeal insofar torment as to its future course. Moscow’s relationship with as it reflected traditional Russian beliefs in the country’s the outside world in general, and in particular with its exceptionalism, but neither it nor the proclamation of neighbours, wider Europe and Washington, reflects that special ‘Russian values’ resonated with the public as struggle and adds to its dynamic. But the key lies in the compelling justification for Putin’s third term, let alone the way in which the Russian leadership seeks to secure its prospect of a fourth to last from 2018 to 2024. Thirteen domestic power, and the nature and extent of its ability to years after their advent, perhaps Putin and his clique were determine the assumptions and ambitions of the Russian in power for their own sakes? On the other hand, who else people. Putin and his immediate circle did not have to was available, and who among Russia’s citizens either take the path they chose in 2012. But the alternative trusted the Russian government as a whole or thought that of institutionally backed economic – and by necessary its nature had much to do with them anyway? Besides, implication political – reform that had been aired over the neither the European Union nor the United States was in previous few years would have taken courage and boldness such good shape as to appear a compelling alternative for to face. It was therefore not a surprise that the Putin many Russian citizens.

239 I am reinforced in this understanding by what others contributing to this report have written, but the choice of words is mine alone. 240 Philip Hanson, James Nixey, Lilia Shevtsova and Andrew Wood, Putin Again: Implications for Russia and the West (London: Chatham House, 2012).

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Great Power? Nor were Putin’s ambitions to form a Eurasian Union seen as necessarily incompatible with EU Association Agreements Putin’s long-term ambition had always been to restore with Eastern Partnership countries. But then, no Western Russia to what he and many others saw as its rightful countries saw themselves as being in existential competition position as a Great Power.241 As the country became richer with Russia. Moscow’s insistence on what it regarded as the during his first two terms, and while Russian gas was reality of just such an East–West struggle should have been there as a powerful lever, so the Kremlin’s heft abroad and taken more seriously than it was in the West. None of that Putin’s authority at home increased.242 So too, presumably, is to argue that the European Union or the United States did Putin’s self-confidence and his sense of entitlement.243 – the latter being seen by the Kremlin as its rival epicentre Dmitry Medvedev’s failure as president to establish himself – should have followed different paths. But it does suggest as the directing force in Russian politics fed Putin’s vision that the West should have been more fully prepared for the of his own personal role. The inner core of the regime from shock in November 2013. The potential establishment of a 2008 to 2012 remained the same as it had been in the successful and democratic regime in Kyiv was understood in previous eight years, but the role of the siloviki within it Moscow from the beginning as an existential threat to the steadily increased.244 Moscow’s 2008 Georgian adventure Putinist regime in Russia, and to the wider order that the fed perceptions of entitlement to hegemony in the post- Kremlin hoped to establish over the former Soviet space. Soviet space, and Western inability to gainsay it. But the conditions that had underpinned the Kremlin’s domestic and As it was, the struggle within Ukraine focused and foreign ambitions began to weaken after the 2008–09 global sharpened the Kremlin’s pre-existing fears and convictions, economic crisis. The street protests of late 2011 and early from triumph as Viktor Yanukovych reneged on the EU 2012 came as a shock to Putin and his group. The dangers Association Agreement in November 2013 to anger as of ‘colour revolutions’ became a stock Kremlin warning. The he lost to the Maidan protesters in February 2014, with regime’s perception of reality and its message to domestic Moscow’s seizure of Crimea in revenge. It also gave Putin and world opinion laid increasing stress on the proposition the opportunity to rally his people around his banner once that Russia was a besieged fortress, and ultimately the belief more, with the focus firmly on defending Russia against the that a Russia risen from its knees meant that others, and menace of the West, and the United States in particular. especially its ex-Soviet neighbours, had to fall on theirs.

Ukraine after November 2014 Western attitudes before November 2013 Presenting the crisis around Ukraine as one between East Few in the West paid sufficient attention to the implications and West has been good tactics for Moscow. It has induced of what was happening in Russia as Putin’s third term as Western leaders, with Germany in the vanguard, to negotiate president got under way.245 Russia’s inward turn was seen Ukraine’s future with Moscow. And to admit instead, even against the background of the prevailing supposition that to Kremlin insiders, that the issue was at the outset one there would be ups and downs in its progress towards of decent governance in Ukraine would have been hard, something better; and in any case, insofar as it was and very possibly dangerous, given the obvious analogies considered at all, it was seen as something beyond the between Moscow and Kyiv. The Kremlin had, however, full power of Western governments directly to address. The knowledge of how Yanukovych tried to suppress the Maidan major increase in military expenditure and the reforms protests and how he failed. The breathtaking corruption of that went with it (described in Chapter 6 by Keir Giles) the Yanukovych regime was hardly secret. Putin’s regime were seen primarily as necessary and understandable steps probably saw it as a useful ‘kompromat’,246 and certainly to repair past neglect. Putin had after all given military did not attack the Yanukovych family for its penetration of reforms insistent backing both before and after his return to Ukraine’s government, which had built up steadily from the the Kremlin. Less attention was paid to the question of what moment the president was elected in 2010. The Kremlin exactly Russia’s increased military potential might be for. from the first had made it clear that it wanted ‘much more’,

241 An elastic pre-First World War term recalling Tsarist Russia’s recovery of international authority after defeat in the Crimean War and representing contemporary Russia’s ambition to assert its internationally acknowledged authority over its neighbourhood, as the successor to the USSR. 242 See the section on Putin’s new model Russia in Chapter 2 by Roderic Lyne. 243 A number of Russian commentators have gone further. See, for example, Dmitri Trenin of the Carnegie Institute in his noteworthy article of 22 December 2014, ‘Russia’s Breakout from the Post-Cold War System: The Drivers of Putin’s Course’: ‘At the end of his premiership Putin appeared imbued with a sense of history and a mandate from God.’ And Trenin seems to feel that Putin had a point. 244 Siloviki is a collective Russian term for members of the various security organs of the state. 245 See the latest report by the House of Lords EU Committee, The EU and Russia: Before and Beyond the Crisis in Ukraine, House of Lords Paper 115, 20 February 2015, http://www.publications.parliament.uk/pa/ld201415/ldselect/ldeucom/115/115.pdf. 246 The retention of compromising material for later use as blackmail.

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to quote Medvedev as Yanukovych took over in 2010, than hard going. Despite the extensive concessions made to simply the extension of Russia’s lease for the Black Sea Moscow during the negotiations under the ‘Normandy fleet. It had good reason to be disappointed, arguably even Formula’ to reach the Minsk II ceasefire agreement of dismayed, that the effort to force Kyiv into a Eurasian harness 12 February 2015, Russia’s supporters do not for now had backfired. But so taken aback that grabbing Crimea was have secure control over enough territory in Donetsk and its response? And promoting and sustaining armed conflict in Luhansk to set up a durable ‘frozen conflict’ zone like eastern Ukraine the follow-up? that still plaguing Moldova. Extending their grip would remain risky. It would, if successful, lead to the long-term Answers to these questions are central to future Western stationing of yet larger military forces. Establishing a land policy-making and to developing an understanding of corridor to Crimea would be an even greater commitment Russia’s possible futures. What the Russians have said, at still more considerable risk. and still say, is not necessarily the whole truth, to put it generously. The information available to the narrow group The financial cost to Russia of what the Kremlin has already of major actors in Moscow continues to be coloured by the done is, or at any rate should be, daunting. Crimea will prejudices and hopes of those channelling it up to them. be a continuing drain on a constrained purse for as long Those actors have their own presuppositions, and their own as it remains in Russian hands. Supporting enclaves in fears or hopes. Chapter 4 by James Sherr, and the facts on Donetsk and Luhansk would be another, and probably the ground, show just how wrong Russian policy-makers larger, commitment. For now, the Kremlin’s refusal to have been, whether through wilful denial/misinterpretation admit that Russian troops have been deployed allows it or out of ignorance, in the assumptions that underlie their to deny financial responsibility for Donetsk or Luhansk, policies towards Ukraine. but that excuse would not wash if separate statelets were to be consolidated. They would be dependent on Russian Putin and his circle may hope that protection and support. exhaustion and fear will in due course resign The external political costs to Russia are considerable as Ukrainians to Russian domination. But even well. Putin was surprised by the strength of the Western if that turned out to be true, it would very reaction, and the coordination between the United States likely make for no more than a temporary and the EU in setting up sanctions. The strain on Moscow’s relationship with its scheduled Eurasian Union partners lull in resistance to Muscovite pressure. has been considerable, bringing that project’s chances of success into serious question. Russia has overreached itself in Ukraine. Far from compelling that country to renounce its European The assassination of Russia’s former deputy prime minister, orientation, it has reinforced the message that Russia – and Boris Nemtsov, on 27 February 2015 highlighted a growing particularly Putin – cannot be trusted and that protection risk to Russia itself. The violence of Donbas interacts with against Moscow is therefore essential. The revulsion Russia’s existing vigilante culture, and the menace of Putin’s 247 against the corruption and misrule of Yanukovych and the proxy in Chechnya, Ramzan Kadyrov. The repressive realization that the Kremlin model is essentially the same policies that have increased as Putin’s third term has remain for the majority of Ukrainians a key component progressed both feed on and are fuelled by Russian efforts in their ambition to move towards democratic values to subdue Ukraine to its will. of Western origin, and a closer relationship with the West. They have once again shown themselves ready to act courageously to that end, as they did in 2004, when What now? Moscow tried to prevent the victory of Yushchenko over Yanukovych. Putin and his circle may hope that exhaustion Minsk II provided for a lull in the fighting in Donbas, but and fear will in due course resign Ukrainians to Russian its provisions were contradictory and open to conflicting domination. But even if that turned out to be true, it interpretations by the three principal parties: the EU as would very likely make for no more than a temporary fronted on 12 February by Germany and France, together lull in resistance to Muscovite pressure. The leaders of with the wider West by extension; Russia; and Ukraine, Russia may have persuaded themselves otherwise, but if which like Russia is free to cry foul at any stage. In the so they have failed to register why their efforts to rouse absence of a clear commitment to the agreement as a Russian-speaking Ukrainians in the east have proved such road to a sustainable settlement over the longer term,

247 Andrew Wood, ‘Real Putinism’, The American Interest, 1 April 2015, the-american-interest.com/2015/04/01/real-putinism/.

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which would require its creative interpretation in the framework for the security of the whole of the European light of shared aims, it seems unlikely to prove more than a continent. That aim remains in force, along with the temporary and partially respected ceasefire. restoration of the territorial integrity of Ukraine itself. But defining Western aims in more detail has proved difficult. The West As noted earlier, there are many in the West who have been seduced by the Russian line that Moscow has been EU and US sanctions against Russia have had an betrayed by the West over the years, and in particular by the ambivalent effect on Russia so far. They have on the one enlargement of NATO. According to this logic, the possibility hand consolidated majority domestic support for Putin, of Ukraine joining NATO was a significant factor in at least over the short term. On the other, they have precipitating Russia’s direct intervention and subsequently played into pre-existing Russian economic problems its (officially denied but patently obvious) incursion into clearly linked to Russian failures to address long-standing Luhansk and Donetsk. It is supposed therefore that an structural economic and political problems. Their effect, undertaking never to accept Ukraine into NATO, whatever if maintained, is likely to increase over the next couple the wishes of Kyiv might be now or later, together with of years. Their reach is enhanced beyond their detailed (in most such propositions) at least de facto acceptance of provisions by the need for Western enterprises to interpret Moscow’s occupation of Crimea, is an essential element them broadly so as to avoid possible difficulties with their of an East–West negotiated settlement of the crisis in and own authorities, and by Moscow’s imposition of counter- around Ukraine. It is certainly the case that Moscow has sanctions. All concerned must consider whether wider built up a grievance narrative over the years, including over sanctions might at some stage be imposed in response to NATO enlargement, and that this narrative has satisfying further aggressive Russian actions. force for many Russians. That is a fact, irrespective of the The problem for the EU, however – for now at least – is to truth of the tale, just as it was a fact that many Germans maintain sanctions at their present level, not whether or not in the interwar years believed in the legend of the Stab in to increase their range or severity. Keeping them at their the Back. It does not at all follow, however, that accepting present level has been linked to an uncertain yardstick, Ukraine into NATO was ever a real possibility in 2013 or the implementation of Minsk II. European judgments and that a promise now never to do so would be a viable part of expectations have varied from alarm to something closer to a settlement negotiated between Russia and the Western complacency as particular shocks such as the downing of powers and forced on Ukraine. To take that approach would Flight MH17 or clear Russian military interference in eastern in any case be to admit Moscow’s right to decide Ukraine’s Ukraine give way to relative calm in Donbas. Little has been future, by force if need be. said of Russian-induced repression in Crimea, whose fate was Germany has moved into the lead in the West in barely considered during the discussions leading to Minsk determining policies towards Russia and the Ukrainian II. There can be no certainty over how the EU would reach problem. Berlin has become more critical of Putin than it a workable consensus by the end of the year on allowing EU once was, and markedly less trustful of him and his ruling sanctions to be eased or lifted, based on whether Minsk II group in the process. Washington’s role in this evolution is had or had not been sufficiently fulfilled by Moscow’s Donbas less clear than one might have expected. Merkel’s opposition proxies or Kyiv, or Moscow itself. Opinion in Washington, for to America – or the less immediate possibility of Europe – that matter, might still be divided, too. Congress is minded to supplying lethal weapons to Ukraine may have coincided be tough, but the executive arm far less so. with Obama’s reluctance to do so. She has insistently Events may of course weaken the link between maintaining repeated that force cannot resolve the Ukraine problem. The sanctions and Minsk II, but the fact that such a link now trouble with that is that the Russians in effect insist that it exists gives a focus to the purpose of sanctions that was can, and show no sign of changing their minds. lacking before. Their original aim was to punish the Other Western mantras include the need to preserve Kremlin and those directly implicated in Putin’s decision- the territorial integrity of Ukraine, and the centrality of making for the seizure of Crimea, and they were increased support for its right to democratic development together in response to subsequent Russian adventures in eastern with the concomitant close relationship with the West, Ukraine. President Barack Obama foreswore direct military and with the EU in particular. Again, however, these are intervention from the beginning, and besides, no European worthy aims whose concrete meaning is disputable. If countries would have supported him had he done otherwise. Minsk II is taken as indicative, then one interpretation of The general aim, which Chancellor Angela Merkel has it would be that Kyiv would pay for the cost of Russian- articulated with particular force, was for the West to respond promoted enclaves in the east of Ukraine that are not in as effectively as possible to Russia’s challenge to the post- practice subject to its writ. This would come close to the Cold War international order, and to restore its proper

Chatham House | 53 The Russian Challenge Russian and Western Expectations

idea of a ‘frozen conflict’ settlement. The Russian Ministry will remain just that until Ukraine’s future becomes of Foreign Affairs has already interpreted the clauses clearer, and as Russia’s domestic politics develop in parallel in Minsk II as meaning that Kyiv would have no right to with that. For all the power of the levers that Moscow has oversee elections in the two ‘People’s Republics’ in Donetsk in its quarrel with Kyiv and the West, there are near-term and Luhansk. But this provision is incompatible with constraints on their potential that are set to increase over Ukrainian territorial integrity in any real sense. And the the year and into 2016. The most obvious of these is the West has yet to come up with serious plans to cope with speed with which Russia’s financial reserves are being paying for and ensuring the reforms it demands, and that depleted and the inability of the government to keep up Ukraine needs, if it is to become the stable democratic with the pressures put upon it by sanctions and the fall state that the West proclaims as core to its strategy. in the price of oil. The reality is that the West’s primary focus is on dealing with Russia, though of course, as it would maintain, As things stand, Putin has invested so much, preferably not at the expense of Ukraine. The West has to a not least of course in eastern Ukraine, with significant extent tacitly accepted the contention that what so little to show for it in concrete gains for it faces is primarily an East–West contest, not one about the his country, that he is for now condemned to nature of Ukraine’s potential for democratic and economic show himself indomitable. reform, with all the implications that would have for Russia’s future development, and for Putin’s place in it. If there were such a thing as a pure national interest, Putin would never have gone in so deep over Ukraine. Crimea Russia was risky enough. As things stand, he has invested so much, not least of course in eastern Ukraine, with so little Putin’s objectives, too, are easier to discern in general to show for it in concrete gains for his country, that he is outline than in terms of particular targets in relation to for now condemned to show himself indomitable. The Ukraine. One step has led to another, in an effort to bolster personal risks of admitting or even appearing to admit his regime at home, and in a wish to deny Ukraine to the that he has been in error are considerable. It is not at all West. It is not obvious that he has a strategic endgame in evident, however, either what any further advance would mind, such as splitting Ukraine in two, as has sometimes achieve or what consolidating a defensible position would been suggested. Nor is it clear that he knows how to reach entail. This surely is a second constraint on near-term safe ground. What he has done, however, fits into a pattern Russian policy decisions. Putin has spoken often enough rooted in the nature of his domestic rule, and the way it has of the need for unity in the face of the threat from a West come to depend on the assertion that Russia is surrounded driven by a vindictive United States – but sound and fury by foreign enemies, with the United States in the vanguard. are not enough. A leader sure of what to do next in pursuit In a country whose rulers are not bound by the law, and who of clear and well-recognized goals has authority. Waiting rely in the last resort on force to ensure the obedience of the for others to concede some prize is not the same thing as people, it is natural to believe that the rules which in truth having a real strategy. govern international relations are the same: might is right. Putin’s poll ratings, combined with an image of a Russia The post-Cold War settlement that is critically important for inured to hardship, boost the supposition common in the the West as the basis for European security is for Russia’s West that he will remain dominant in his country at least present rulers no more than a framework whose time has until the next presidential round in 2018 but more probably passed. The Russians use the language of democracy, the for a further term as well, which would keep him in the market and international law, but its content for them Kremlin until 2024. Plenty of Russians share Putin’s view is different. The natural state of international affairs for that Russia’s troubles are all the fault of others. Turning them is that Russia, as a Great Power, should dominate in on themselves and raising two fingers to the rest of its neighbourhood and dictate its governing structures. the world, and the United States in particular, is some Frustrating that right is seen as aggression, and linked to consolation for the disappointments they have endured internal unrest, which is blamed on Western incitement. over the past many years. But no one can live forever on a The fear index of Russia’s neighbours, and for that matter diet of patriotism alone. Putin is well aware that others who its formal allies, has undoubtedly risen over the past year have seemed secure and popular have lost power suddenly, or more, along with their evident or concealed hope that completely, and often enough fatally. Russian history is the West will restrain Moscow’s appetite. But the present punctuated by such outbursts as well as being characterized focus remains on Ukraine. Speculation as to how Russian by long periods when the supreme authority of the ruler has policies towards other states in the region might develop been passively accepted.

54 | Chatham House The Russian Challenge Russian and Western Expectations

Putin and his cabal have no answer to the longer-term corrupted as Russia’s. Since Yanukovych was ejected, the questions about Russia’s future. The word ‘modernization’ civic initiative of multiple groups of Ukraine’s citizenry has has dropped out of their vocabulary. Corruption in both been notable, in contrast to the civic passivity of Russians. its senses of bribes and kickbacks, and the fundamental Their will to resist Russian aggression has been clear, and distortion of society by a culture of rule by personal the courage of ordinary Ukrainians in facing up to regular favours coupled with blackmail, has grown under their Russian formations equally remarkable. Russian troops have rule into a fundamental system of government.248 Instead taken more casualties than they or foreign observers could of a rule of law applying to all, high or low, Russia runs have expected. If spirit alone could give Kyiv the upper on laws elastic in their meaning, ineffectually policed for hand, it would have done so. their constitutionality and arbitrary in their application. But Ukraine’s forces have been outgunned and The courts can be and are manipulated by the powerful, outmanned. The West has yet to let them have weapons and used at will against unruly regime vassals. The Duma which might blunt assaults by Russian tanks. There has and the Council of the Federation have been drained of been progress towards political and economic reform, authority. The regions are dependent on the dictates of and successful presidential and parliamentary elections. the Kremlin. The bigger the Russian business, the greater But the establishment of a fully accountable and effective its subservience to the state – if state is the right word machinery of government has yet to be completed for the for Russia’s governing system. The resulting stasis looks major part of the country, which so far lies beyond Moscow’s strong but is vulnerable. power – whether directly or by proxy.249 Without greater The Kremlin now has no ways it can bring itself to accept Western commitment, the risk of the failure of Ukraine’s which might resolve the problems it faces over the next effort to transform itself into a European state from one few years. The alternatives are quite stark. If Putin chooses based on the faltering Moscow model is patently clear. to stick to present economic policies, to ramp up domestic repression as and when he believes it necessary, and to balance Russia’s self-isolation with a belligerent attitude The West’s response towards the West, and towards neighbouring states too for that matter, he will run into increasing economic and British and other Western policy-makers must of course political difficulties. Putin promised his country stability, deal in the first place with present realities, and present not the return of the shadow of 1998. The hope in the leaders. But they need also to take account of future Kremlin may be that in time the situation in Ukraine will possibilities in framing their approach. At the least, in change to Russia’s permanent advantage, that EU and dealing with Moscow, it is essential to remember that Putin maybe even US sanctions will be relaxed, and that the price and his circle are not the same as Russia and its people, of oil will rise back towards its old levels, thereby giving the and that their interests do not necessarily coincide. Ways Russian economy a further lease of life in its current form. should be sought to expand Western communication with Russia’s leaders, at any rate, seem intent on using the time the latter. The current Kremlin may want to develop the they believe they have in the course of this year to stick to false promise of a separate, self-sufficient and introverted their present last. Russia dominating the former Soviet space. The reality is that Russia is already part of Europe. The risks of this approach are considerable, and likely to grow. But so are the risks, for the narrowing group around An increasing number of Kremlin-oriented Russians argue Putin, of beginning seriously to address Russia’s long-term that the purpose of the West, and of course the United social, economic and political problems. The crisis around States in particular, is to change the regime in their country Ukraine is one dangerous element of a deepening crisis for through ‘colour revolutions’. Preventing them is the Russia itself. Kremlin-mandated duty not just of Russia’s internal security forces but of the armed services too. In truth, the West is not consistent, organized or effective enough to mount Ukraine such revolutions, even if it had the wish to do so. Russian Both Western policy-makers and their Russian counterparts leaders’ warnings of the dangers reveal their fear of their know less about Ukraine than they should, and are inclined own people. So do the pre-emptive measures of repression to underestimate its potential (see Chapter 4 by James they have taken to protect themselves, including the use of Sherr). In contrast to Russia, Ukraine has no vertical of licensed but deniable thuggery against particular offenders, power, though its governance under Yanukovych was as paralleled by their actions in and against Ukraine: criminals

248 See, for instance, Alena Ledenova, Can Russia Modernise? Sistema, Power Networks, Informal Governance (Cambridge University Press, 2013). 249 See Orysia Lutsevych, ‘Ukraine’s Oligarch Gambit’, Chatham House Expert Comment, 9 April 2015, http://www.chathamhouse.org/expert/comment/17393.

Chatham House | 55 The Russian Challenge Russian and Western Expectations

have their uses. The West has no interest in letting Russia rebels in Donbas. This is war by any reasonable definition, slip into anarchy, and never has had such an interest. whether or not Putin cares to admit what he is doing. Moreover, strategic patience in pursuing the present Western But nor does the West have either the desire or the means course does not mean that increasing the pressure on Russia to protect Putin’s regime against change, whether managed by harsher sanctions or by direct military assistance of one or violent. It is regularly suggested that a successor to Putin kind or another to Kyiv should be ruled out. would be worse than he is. All that can in truth be said is that a successor would be different, and would explore The West should increase its support for Ukraine in different policy options. That would be the case whether moving towards a more secure future with an accountable Putin was ousted by an internal coup, by illness or by government subject to the rule of law and therefore popular unrest. The risk of a chaotic ending is heightened more equipped to prosper in its European and global by the lack of any realistic succession mechanism in today’s contexts. Helping Ukraine to make a transition of that Russia, and is evident to plenty of Russians themselves. nature would be the best help the West could give Russia too, since the desire is for it too to revisit the possibility It would nevertheless be sensible for the West to give of democratic development. The cost of helping Ukraine further thought to how it might deal with the consequences will be considerable, but ought to be faced: the costs of its of regime change in Russia. Effective communication collapse would outweigh them. with the Russian people and the defence of human values beforehand would be essential for Western credibility. Getting too close now to a ruling cabal that abuses universal It would be imprudent for transatlantic or values, while tempting for reasons of so-called realpolitik European countries to suppose that a return on a short- or medium-term basis, would have a longer- to what was once seen as business as usual term cost. Prudence is needed as well over the degree to is a realistic possibility for the foreseeable which the West may seem complicit in its commercial and future. Doing business as usual with financial dealings with possibly corrupt Russian entities and persons. No self-evident answers to the dilemmas inherent Fortress Russia, a country undermined by in approaching such questions exist, but the realization that its present practices, has never been easy. the present regime will not last forever, and may indeed face a serious crisis within the foreseeable future, should help to It would be doing Russia an ill favour to treat that country focus the mind on their importance. as an exception franchised to its own rules as a Great Power. It would be imprudent for transatlantic or European Planning for the future ought, lastly, to cover the scenarios countries to suppose that a return to what was once seen as from changes of leadership within the current structures, to business as usual is a realistic possibility for the foreseeable the emergence of a group ready to pursue structural reform future. Doing business as usual with Fortress Russia, a in some sort of accountable dialogue with the Russian country undermined by its present practices, has never been population, to regime collapse. The future may rarely be as easy. It looks set to become more difficult, with or without a visionaries predict, but sketching out possibilities can clarify Ukraine settlement. future options and draw attention to possible dangers: refugees? nuclear risks? financial aid? the effects in Central There is as yet no sign that Putin has recognized the Asia and the Caucasus? the lessons of the collapse of the dangers for his country in his foreign policies or his Soviet Union? domestic policies. There are those in the West, some of them authoritative, who argue that the West needs to offer In the meantime Western leaders should bide their time a ramp for him to climb down. The assumptions behind at least until existing pressures on Russian policy-makers that proposition have been and remain questionable. If show some signs of inducing them towards substantive Ukraine were about to give up the struggle, Putin would feel negotiations over Ukraine, beyond paper promises likely on triumphant and in no need of a ramp. As it is, if he came to past form to be broken as soon as convenient. Sanctions are acknowledge that his efforts to find foreign allies, China not having a significant effect, which is likely to increase over least, had proved insufficient, that he faced a long struggle 2015. But there is at present nothing on offer from Moscow in bending Ukraine to reliable obedience, and that he or either to Kyiv or to the West as a whole that holds out some an eventual successor had to do something convincing to prospect of a durable modus vivendi. revive foreign investment in his country, he would be well That does not imply a refusal from time to time to test Putin advised to pursue the possibilities of working with outside directly. But the parameters for that must be clear and strict, powers towards a durable way of living with a changing including insistence on a complete and verifiable end to the Ukraine and with the West as a whole over a wider range of presence of Russian soldiers and the provision of supplies to other matters, rather than putting everything into the anti- American and anti-Western basket.

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Western countries, for their part, should be on their guard. what is going on in Russia itself. The West should also Defence has now to move up national agendas. And the explain its policies towards Russia, including of course need is now evident for more effective and better-informed those affecting Ukraine, to Russia’s post-Soviet neighbours instruments to be nurtured both nationally and within the – and to China. They deserve to hear directly how the West EU and NATO to identify, pre-empt and manage potential understands the position, and how Western countries threats to peace and security in Europe, including by propose to proceed. At the least, Russia’s propaganda effort regenerating a collective ability to understand and analyse needs to be balanced in this way.

Chatham House | 57 Summary of Recommendations

The root cause of the challenge posed to the West by Russia Specific policy objectives lies in the country’s internal development, and its failure to find a satisfactory pattern of development following the • The reconstruction of Ukraine as an effective collapse of the Soviet Union. Vladimir Putin and his circle are sovereign state, capable of standing up for itself, is not the same as Russia and its people, and their interests do crucial. This requires the input of much greater effort not necessarily coincide. The West has neither the wish nor than has been the case up to now. the means to promote, or for that matter to prevent, regime change in Russia. But Western countries need to consider the • The EU’s Eastern Partnership needs to be transformed possible consequences of a chaotic end to the Putin system. into an instrument that reinforces the sovereignty and economies of partner countries that have proved willing The West needs to develop and implement a clear and to undertake serious political and economic reform. coherent strategy towards Russia. As far as possible, this strategy must be based on a common transatlantic and • The effectiveness of sanctions against Russia depends European assessment of Russian realities. In particular, on their duration as well as severity. Until the issue policy should draw on the evidence of Russia’s behaviour, of the violation of Ukraine’s territorial integrity is not on convenient or fashionable narratives. fully addressed, sanctions should remain in place. It is self-defeating to link the lifting of sanctions to As outlined in more detail in the Executive Summary at the implementation of the poorly crafted and inherently beginning of this report, the West’s strategy needs to include fragile Minsk accords. the following clear goals, and establish the near-term means and longer-term capabilities for achieving them: • The West should not return to ‘business as usual’ in broader relations with the Russian authorities until there is an acceptable settlement of the Strategic goals for the West Ukrainian conflict and compliance by Russia with its international legal obligations. • To deter and constrain coercion by Russia against its • EU energy policy should aim to deprive Russia of European neighbours, for as long as is needed, but political leverage in energy markets, rather than to not to draw fixed dividing lines. The door should be remove Russia from the European supply mix. kept open for re-engagement when circumstances change. This cannot be expected with any confidence • Western states need to invest in defensive strategic under Putin. communications and media support in order to counter the Kremlin’s false narratives. • To restore the integrity of a European security system based on sovereignty, territorial integrity and the • NATO must retain its credibility as a deterrent right of states to determine their own destinies. to Russian aggression. In particular, it needs to demonstrate that limited war is impossible and that • To find better ways to communicate to the Russian the response to ‘ambiguous’ or ‘hybrid’ war will regime and people that it is in their long-term be robust. national interest to be a part of a rules-based Europe, not an isolated regional hegemon. • Conventional deterrent capability must be restored as a matter of urgency and convincingly conveyed, to • To explain Western policies consistently and regularly avoid presenting Russia with inviting targets. in discussions with China, and to all former Soviet states, most of which have reason to be concerned • Individual EU member states and the EU as a about Russian policies, whether or not they admit it. whole need to regenerate their ability to analyse and understand what is going on in Russia and • To prepare for the complications and opportunities neighbouring states. This understanding must then that will inevitably be presented by an eventual be used as a basis for the formation of policy. change of leadership in Russia. • Not to isolate the Russian people. It is not in the Western interest to help Putin cut them off from the outside world.

58 | Chatham House Independent thinking since 1920

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